ML20011A642

Annual Financial Rept 1980

ML20011A642
Person / Time
Site:	Monticello, Prairie Island, 05000484
Issue date:	02/27/1981
From:	NORTHERN STATES POWER CO.
To:
Shared Package
ML112970835	List: ML112970834 ML20011A642
References
RTR-REGGD-09.004, RTR-REGGD-9.004 ANRL-801231, NUDOCS 8110290223
Download: ML20011A642 (40)

Text

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Monlcolo Foribault La Crosse IL

== Folk h Sherburne County (Sherco) 1 Northern States Power Company Electric Service Area (Minnesoto; and its subsidiary,

< Cm9 Northern State; Power Company Monticello Near)

El d

(Wisconsin), together known as

~

g{s NSP, serve a 40,000 square

'~

ce Area mile crea in parts of Minnesota, Lake Superior District Wisconsin, North and South Power Company Dakota.The company generates, h Black Dog (cmt) transmits and distributes electric power to mo:e than one million

~'E Major Cities nS U High Bridge tcm9 customers and distributes natural gcs in 81 communities within its 345-kv ond 500-kv lines service arco. It also supplies some h Allen S. King fcm9 heating and telephone service.

230-kv and under lines

@ Prairie Island <wler) l NSP,on Equal Opportunity employer, had 6,965 benefit employees at December 31,1980.

l Headlints:

4 e-

Earnings down (page 2)

JManitoba Hydro link in service (page 4)

~ Updated demacid forecast lower (page 5, Rote increases sought (poge 7)

Tyrone cost recovery pressed (poge 8)

Sherco 3 unit shoring proposed (page 9)

LSDP offiliation before SEC (page 9) 1 Construction funds need modest through 1985 (page 10) 1.5 million share repurchase accomplished (page 11)

NSP plans conservation investment (page 14)

Gas service extended to new customers (page 16)

The Revenue Dollar Highlights:

Where it comes from...

I r e

1980 1979 (Decreasei

+-

m.

Dividend rate at year end.

$2.42

$2.28 6.1 %

/

Earnings per share.

3.21 3.51 (8.0) zee Return on average common 11.7 %

13.2i'o

'G=

my equity.

y

08 *?

Earnings available for common (millions)......

5 97.3

$ 106.3 (8.5)

- cdYM Revenues (millions).

1 159.1 i0:8.2 10.6 q

g Totol assets (millions) 2 735.3 2 619.9 4.4 x

• a, '.inavses erec,nc Generating capability-summer

- sores sgre (thousands of kilowatts).

6 052 o108

(.9)

Where it goes...

Peak electric demand (thousands

~

of kilowatts)..

4 873 4 247 14.7*

" N Electric retail use (millions of g

• Im?

kilowatt hours)....

21 008 20 575 2.1 4

T==

Gas heating use (millions of cubic feet).

45 419 48 845 (7.0)

F*'"""_

M Customers..

1 371 651 1 344 237 2.0 a

mm

• -G=

?

Benefit employees.

6 965 6 700 4.0 resi a.-

mnehened ;

(;hechased lerRosalef

• 3.9 percent weather normal. red a -: m

$ff,e."el,Ee'$s'O

~

s w' ' L w- >

in s cro,,,,.

Contents Letter to Shoreholders.

2 Power Supply.

4 Corporate Affairs.

7 Finondol

.10 Division Operations.

.13 Corporote Services.

.16 Directors and Officers.

.19 Monogemen' Discussion and Analysis.

.20 Financial Statements and Notes.

.22 Accountants' Opinion.

.32 Management's Opinion.

.32 Financial Statistics.

.33 Operating Statistics.

.34 Common Stock Data.

.36 Shoreholder Information.

. inside Back Cover I

To Our dhnrehold us:

1980 was a disappointing year for Beyond 1981, we believe h and the possibihties of other kinds of NSP.1980 earnings per share financial outlook is considerably businesses. The future appears to be were $3.23, down from the $3.51 brighter. We expect somewhat foster bright, at least from the standpoint of earned in 1979. Moreover,57 cents growth in electric use because of energy requirements from electricity.

of the 1980 earnings are the economic recovery, increasing Today about 20 percent of U.S.

result of rate increases which are homebuilding in our service area, energy consumption is ultimately in subject to refund. This is certainly not and substitution of electricity for other the form of electricity. lt is estima+ed satisfactory financi al performance.

types of energy. In addition,we that 20 years from now 35 to 45 1980 was one of those years wig net be burdened by substantial percent of ultimate energy use will be when if anything could go wrong,it financing requirements because we electric. To reach this percentage will did go wrong. NSP was beset with will not be building a new generating require o compound annual growth high inflation, buainess recession, plant any sooner than 1985.

rate 2% times foster than U.S. total diminished growth in use of our We are also generally optimistic projected energy growth.

energy by our ce" many about the future because we believe We established a plan to help us summer storms, increased generating NSP has the ability to meet the reduce peak demand growth by 300 plant maintenance, o marked challenges ahead.This ability has to 500 megawatts by 1990 through decrease in electric sales to other been demonstrated in several orc is.

load management and we are utilities and an ever-increasin9 First, over the post four years our studying effective otternatives in amount of regulation-generating plant availability has cooperation with the Electric Power While retail electric sales been notably superior to the industry Research Institute and others.

increased 2.1 percent, total electric overage. In o recent world survey, We completed the trcnsmission sales, induding sales to other utilities, our nudeor plcnts in 1979 ranked first link between Monitobo hydro were down 1.0 percent, and natural and third.While nudeor availo ility and NSP in May,1980, odding the L

gas sales decreased 2.9 percent.

for 1980 was down from past ye-it equivalent of 500 megawatts of Although earnings were down, was better than the industry ove age; hydro generation provided by a we were able to increase we expect continued superior renewable resource. We are dividends 6.1 percent, bringing tb performance in the future. Also, ca expanding use of unconventional annual dividend rote to $2.42.

the nudeor side of our business, energy sources and expect benefits This was the fourth consecutive June we have been omong the leaders in soon from use of wood, refuse, that dividends have been raised.

exploring methods to recover costs rubber and groin dust as fuels.

Other financial measures f r decommissioning nuclear plants While oil of these things put us in nd for nudear fuel disposal.We also o favorable hght,we also face many remained strong-capital structure, re le ders in trying to develop more of the some challenges other utilities bond interest coverage and intemol cash generation. Hence the quality heating units from given quantities of face. In addition to the primary goal nudear fuel.

of improved finonaal performance, of our senior securities continues hi h Over the post three years other challenges are related to and the need to raise funds throug we intensified our corporate planning regulation of construction and the so!e of securities remains eff ris nd we were ne ff ur per ti n f generating plants.

relatively low.

companies in 1980 to be nominated First, there is the challenge Our crystal ball indicates that for an industry award for strategic of operating our three nudear plants.

jn 1981 there will be continued high planning efforts. We have o new Following the Three %ie Island inflation rates,a sluggish economy major planning project coiled and little growth in the use of our

" Project 2000-Strategic Directions energy; we ore forecasting only a 1.7 for NSP". Here we will evoluote the Earnings Per Share percent increase in re. ail electric kwh future of the electric and gas W 9=m sales and a 1.2 percent decrease for busincss, how we should structure 53.39,JS

'#$. $3.2,3 natural gas use-ourselves to handle that business,

' 73' i

s2y,3 s2.86 While pending rate cases should 4,

help improve our 1981 earnings T

1.o2 I

.97' performance over 1980,it will be Dividends Paid a

.9i difficult to achieve the level of on Common Stock p.s4 1,

.n 9

- 37 earnings we think you deserve.While 1ey quocer; s2.35 "3is ; y.3$ l #5 2N A9 s2.co S

gj the company intends to file for

-A9 odditional rate increases this year, 4 ' ~sim 1

i.21 e J

Ass j

sts :. Aos, i_

97 Me9]

i they cannot be implemented in time

~

l to improve the 1981 outlook signifi-3 ~J85 Ill 1

l

+

contly. This is not a management 2 Q '

,,3

_ Q;0

,. sis se

- 37 1

_4

._ _a,a J

1 76 77 7s 79 so choice, but is related to the timing of oresent cases and the laws and

, Aas Air O f N M '8

• inaudes earnmos sub,ect fo rerund Pendmg

1. @,3h. PProd of roWws, 3rd e,2h k-La I

L'

'"9" *'Y regulations of the four states 76 77 78 79 80 we sewe.

2

accident, the Nuclear Regulatory are all well aware of the generally To cope with ongoing com-Commission (NRC) has ordered unfavorable financial results for the mitments and anticipated industry many changes in all nuclear genera-whole efectric utility industry over the ch ages, our realigned top 4

ting plants. To respond to the NRC, post few years. One underlying management forms on integrated this company and the industry orc problem is inadequate rate relief.

team geared to filling current needs incurring additional operatirg and While NSP's financial performance and future requirements. Five construction costs.We have has been better than overage for the executives report to the Chairman additional potentici problems related electric utility industry, this industry and President in five areas:

to disposal of nuclear spent fuel and has not been able to earn retums Corporate Affairs, Division low level radioactive wastes.

equoi on overage to other American Operations, Corporate Services, j

So!utions to these problems must industries. We I elieve on improve-Power Supply, and Finance.

come from federal and state ment in our rr.m on common This an'nual report details the governments and power companies, equity is one of our most important work and plans of each oreo.

and will not be easy ones politically.

challenges, and we continue to work Interdisciplinary project teams from diligently with our various publics Sincerely, NSP are assigned to deal with these to achieve that improvement.

problems and we expect them to be During 1980 our management A

O successful.

was strengthened by election to the

[fk

_~

]

The Minnesoto Energy Agency Board of Directors of Margaret R.

yJ issued a certificate of need in Presko, president of Monkato State February,1981, granting the company's University, and Clayton K. Larson, Don McCarthy request to increase its spent fuel who was named NSP President and Chairman and Chief Executive Officer storage capacity at Prom,e Island.

Chief Operating Officerin October.

The certificate postpones possible 4

We appreciate the contributions p emature shutdown of the facility.

made by the directors, officers and tnergy provided from our three employees and share their pride :n 6

nuclear plants has been our most NSP's long record of successful l

economical power source, and we partnership with our shareholders Clo on lorson expect that economy to continue "d U USt S-even offer substantial investment in President and Chief Operating Officer i

modifications.

February 27,1981 Another challenge to generating i

electricity is getting the coo!-fired Sherco Unit 3 or, line. We have many Clayton K torson and Donald W. McCarthy l

regulatory hurdles to overcome, but we are optimistic that we will get

.J the job done.

l We applied to the Minnesoto Energy Agency to moddy the existing certificate of need for Sherco 3, the 800-megawatt coal-fired unit to be Nd.

/

odded to the Sherbume County T

facility. If approved, NSP would retain ownership of about 450-mw, with the 7-

-^7 remaining capacity owned by other

- ".k E f '

d/

~

Minnesota electnc suppliers. By the Ji end of 1981 we expect a ruling on A-

. CL (C

this application.

g[ %Q j

The Company is pursuing I

regulatory authorization to recover

'2

- Mp unomortized costs of abandoning

_ E(1 -

'i. y

]W, the Tyrone nuclear plant, and we anti-s cipate we will be able to recover W

o substantial amount of the Tyrone 4 ('

'-/

obandonment costs through increased rates.

,a k

Our proposed offiiiotion with

' 4 g

Lake Superior District Power Company i

7 jqu is progressing. Securities and Exchange Ey

,; F

/

Commission hearings were held

-l l

and an order on the Company's A

l opplication for approval is pending.

7. #

Finally, there is the question of

\\

l obtaining adequate rate relief.We w

h-t

PowerSupply u

n.

mn line between the Twin Cities and year the plant was running or could Winnipeg. We are particularly have been run if the system demand p eased that this line was completed required it to do so. B x ause of 1980 or, time and within the original refucting, maintenanca and repairs, n 1980 our cusiomers used jndget. Our only disappointment the operating availability of our three o total of 25,354 million kilowan hours regarding tnis project wm that a nudear units overaged 79 percent,

{kwh) of electric power. Of the toto!

severe drought in the wctershed of down from record availabef the NSP generation, abou-53.cercent the Nelson River restricted the previous year, which compare; to on was supplied by our coo!-buming omount of energy available during average of 65 percent for all U.S.

the summer of 1980. With more nudear plants.

normal weather we expect to receive Similarly, our three largest coal-Enerc4y Sources for up to 7 percent of our energy from f; red units also performed very weil Electnc Generation this source.

with an overage operating Completion of this transmission availability of 86 percent. This Unty NsP l ink provides O means to interchange compares to most recent available inaustry M i4Jes e-ned 5yd o & <

power with Manitobo Hydro on a national statistics of 74 percent M ggge seasonal basis.Their system peck for piants of this dass.

occurs in the winter heating season, while NSP's system experiences

%E its peak load in the summer, due Nuclear Waste Disposal Unruolved b{di !-% [F (j[

to air conditioning demands. This

] ;' c. ass,

[

j al om. both of the systems to defer Public interest in nuclear plant matters

" /Tg

[

constructing additional generating remained high during l980.Txhnical ik j

facilities by the interchange of power operating and maintenance activities,

' c,g c a sa c.,,3 over the new high-voltage line.

which in post years would have been of concern only to our own engineers nd the regulatory agencies, now Plant Performance High receive extensive coverage by the Bo rst:

80 81 90 media.

In 1980 our major generating plants One area which continued to performed very well. A commonly receive a great amount of attention power plants,39 percent from our used measure of plant performance during the year was the disposal nudeor plants and 8 percent was is operating availability, which is of radioactive wastes ossociated with hydroelectric energy from our own simply the percent of time during the the spent fuel discharged from the plants and Manitoba Hydro. Only reactors. While the vast majority of 0.2 percent was produced by oil-fired expert opinion holds that these equipment.

Plant Availability 1980*

wastes con be safely isobted, the authorization to proceed with the j A.S. King 88%

siting and building of disposal 1

Monitoba Link Completed T~~

1-facilities remains a difficult political (Sherco 1 & 2 86%j problem. In the interim, while the j

federal govemment defers action,it is The increased importation of

! Nationo! Avg Fossil Fuel ** 74*/ ;

necessary to accommodate this hydroelectric energy from Canodo 9

was made possible by the completion spent fuel whia, accumulates year by of a new 500-kv (kilovolt) transmis-Q $ g= g g year at the plant site.This con be accomplished by replacing the rocks j

which hold the spent fuel in the gpcg-storage pool with new rocks which g g-M Mi -

allow a doser spacing of the fuel r N,- -

. - a 3 s y d,

bundles.

Dennis E. Gilberts r e s e : e v. " "l In 1980, at Monticello we SeniorVice President-E ___ i _

F completed the rerocking of the 1

a Power Supply

. Plant ova, lob lay is the nurnbar of hours en a ye '

storage pool so that now it con

)

a plant is available for serv;ce duvided by the tarol hours in the year.

j "Nahonal Electruc Rei,abity Counal 1979 data

)

tNuclear Regu!.t,ry Agency 1980 dora.

l 4

1 1

accommodate all of the spent fuel necessary to implement required bulk of the company's energy for the 9enerated from the beginning of changes. In spite of this, our nuclear foreseeable future, we have not operation in 1971 through the 1991 plants continue to provide our most overlocked some of the more refueling. By that time, we expect off-economical power. Further, we are unconventional resources. Currently 3;te disoosal facilities will be convinced that the changes resulting we are converting a 15-mw availosle.

from lessons leomed at Three Mile generating unit at our French Island A sim%r expansion for Prairie Island have significantly olded to the plant at la Crosse, Wisconsin, to o Island is planned to commence in already wide safety margin built into fluidized-bed, wood-fired operation.

1981 when the necessary federal our nuclear operations.

Bork, sawdust and other waste permit is secured.This expansion products from local sawmills will be must be complete by fall of 1983 in used to fuel the plant, thereby solving order to allow uninterrupted operation Fuel Costs a waste disposal prob!em for the of the plant and, of the same time, WS5 Per million BTus) mills and provi.'.ng a new sCurce of provide sufficient capacity to unload Indusky Nsr energy for NSP Other projects are the core for maintenance.This y

gnj under way investigating the use of expcnsion will accommodate o!! the 1980 1981 ms 85/80 muniapal garbage as a fuel, os well fuel we anticipate discharging s v n us w ste strecims from plants Cool 51.32 SIDS S1.14 51.60 9.0%

through 1990.

processing agricultural products. Nor Nuclear

.45

.44

.48

.78 12.1 %

are we neglectina the other side of Oil.

3.96 4.02 4.42 9.68 19.2 %

the equation-the use by other enter-Plant Safety improved All FuelsS1.68 5.79 5.86 51.3210.8%

prises of our waste heat and surplus steam capacity several projects are A conEnuing flow of information, Costs associated with operation being explored which would provide regulations and plant modification f our cool-f red plants also increased steam to industries and district requirements has resulted from substantially in 1980.This was due heating systems from our plants.

analyses by the Nuclear Regulatory primarily to the increasing price of Commission (NRC) and the industry cool, severance taxes and transpor-of the experience gained from the torion of the cool rom the mines.

Load Forecast Updated occident at Thcee Mile Island plant in Pennsylvania.The expenditure of We recently completed a new forecast o electric demand which is about $57 million at our nuclear Fuel Options Tested 8

plants for mod:fications os well as materially lower than our previous f rec st.The new projections show a increased ongoing operating costs is While cool, nuclear and hydro peak growth of 2.5 percent per yec sources will continue to provide t!.e Manitoba Hyiro Kettle Generating Station on Nelson River has 1,272 mw capacity.

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over the next ten years, compared

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with o 4.2 percent growth rate in the carlier forecast. This means that by i'.

1990 the expected summer peak will be about 20 percent less than the old y

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forecast.

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" Weather normahied 3 2%

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,83 tWea^er normo 6ted 2 6*.

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.4 In retail electric use,we expect

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o growth rate of 3 6 percent per pp.7 _ ;-

year for the next ten years-very myr ;

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.c;g dose to +he earlier forecast. While we estimate somewhat slower growth in regional product and increase in the

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number of households,.ve befieve h%P "fgr[4@p".'h l

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the resulting energy cedines will be l., #

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offset by more electnc space heating.

Cost of electric heating in our gl,4 -

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4 5

,,, ti L E'dh.Ns t F r-! ir(yy,<f,9.e,,,;gjf efih;

,?,e, service area, especially from heat V-

r t. v G ' rC, o %

pumps,is less thno the cost of oil or MT MNM d'/h5 y' OU.?

Canadian-impert naturalgas, even assuming use of a new.e acient gas furnace.

Riverside plant fly ash helps form an urban wildlife ref s.

e With additional electric space heonng in the winter and air conditioning near anticipated of these mvolve replacing ob>otete these units, which had been derated, l

saturation in summer, we expect mechanical dust ccdectors with new to bring them into compiionce with gradual leveling at demo..ds electrostatic precipitators at our Red state emission limits. It wi!! olso demon-upon our generating aciities.

W ng and Wilmarth plants.The third strate the new scrubbing technology By lowering peak demands, we pro ect is a demonstration insto!!ation which appears very promising for con reduce the need to add of a dry sulfur dionde scrubber and future coal-burning facihties.

expensive new generation boghouse particulate removal system As we look forward into 1981, equipment, thereby holding down on our Riverside No. 6 and 7 boi!ers.

our generating and transmission our ro+es and reducing < ur need for This is being donc jointly with Joy-faci;; ties are in excellent condition, additienal investment cc pitoi.

Niro Company at a cost of about $7 and we have adequate supplies of i

million. We expect the installation will fuel and the other resources 11 w the recovery of capacity on necessary to supply the electric Air Quality Improved energy required by our customers.

The year also saw the start of projects to reduce air polluMnt emissions or three of our plants Two 6

Carp rda Affzirs Gining public coal for generation,imposcs a 30 was 41.56 percent, and the company percent severance tax costing our believes this ruling is not in the best customers about $14 million lost year.

interest of customers or shareholders.

NSP is also o plaintiff in litigation We are contesting the issue in current now before the U.S. Supreme Court proceedings.

understanding and acceptance of challenging the tax as an unlawful in its current Minnesota electric NSP positions on pub lic matters is the burden on interstate commerce.

rate filings, NSP asked for a 15.5 primary task of Corporate Affairs.

Broad understanding of any business is advantageous; but it is crucial for Rote increases Sought Residential Electric Bills O uti!ity owned by private investors, (500 KWH*/ Month for selected cme -Dec.1980) regulated by severallevels of Of NSP's total 1980 revenues N'*"' ". - ~ ' -

government and providing service to (excluding non-firm so!es to other

' ' ~ ^ $d630'

-- 555A4;3 the public. Corporate Affairs olso utilities),75.7 percent were within Bokn'

~ ~ ~

seeks govemment policies, leg lat.

is ion Minnesota's regulatory jurisdiction, and regulations which enable NSP 12.0 percent within Wisconsin's,7.4

@elpy_

_$43.28,,

to serve its customers and to provide percent within North Dakota's,2.5 Chicago' ^

'$3332' a fair return to investors. In addition, percent within South Dakota's and

~.

through the law department, 2.4 percent within the Federal Energy Ph5enix;

$31.77]

Corporate Affairs represents NSPin Regulatory Commission (FERC).

Detroit-4t

.$29.88 legal proceedings and provides legal 9

e ces in the conduct of its costs n 78 o d 19 9, SP d not EN file for a major electric rate increase Houston TS25.85 during that period.This is consistent

1

~'

1980s issues Studied with NSP's objective of holding rates W M ee; M 525' to the lowest level possible whi!e

.inctudes fuet and purchased pc. er od,ustments providing on adequate return to Through the local, state and federal investors. However,it become public affairs sections, NSP provides opparent in early 1980 that with percent return on its common equity occurate timely and reliable persistent record rates of inf!ation, the ratio of 42.2 percent. The request informati " on issues that affect its company could not maintain was for $77.5 million in increased operation. These include such varied reasonable earnings. Accordingly the revenues on on annual basis, o an areas as environmental protection, company sought rate increases increase of 12.66 percent. Incluced in rate regulat;on, taxation, conservation, aggressively from oil jurisdictions and this increa ;e is:

plant siting and routing of trans-for c!! utilities.

. $24 million to cover increased cost miswan lines.

Rote increases requested and in order to bring the ellowed return At the federal level, coal granted in previous years were:

to the 12.9 percent level permitted severance taxes and slurry proposals, in the MPUC's last gas rote order.

nuclear and environmentalissues,

yea, peques,ed o, anted

• $35.5 mil! ion to increase the return as well as general business legislation on common from 12.9 to 15.5 offect NSP.We joined other utilities 1977.

597 4 556.4 percent.

and cool users to urge a 12.5 percent 1978.

1.9 1.3

• Approximately $11 million for the lirmtation on severance taxes for 1979.

7.4 4.8 amortization of the Tyrone coal shipped across state lines abandonment.

Montana, the primary source of NSP's in its last NSP rote orderin 1979,

• $7 million for nuc! ear insurance and the Minnesota Public Uti!ities ther miscellaneous costs.

Commission (MPUC) granted NSP

$4.8 million, or 65 percent of its requested increase in gas rates. The r

' Bruce A. Richard MPUC granted a 12.9 percent return L

Senior Vice President _

on on imputed common equity ratio f I,:

corporate Affairs of 40 percent.The company's test-d year common equity ratio 4s 7

-These rates are being collected costs in NSP wholesale rates, court these costs. Depreciation expense, subject to refund until the final appeals from other state commission calculated on on intemol sinking determinanon is mode.

rulings may be necessory ic recover fund basis, would increase about $8.6 The table below shows the these expenses in retail electric rates.

million annually. On February 19, status of 1980's rate increase program.

A proportionate share of Tyrone 1981, the MPUC opproved NSP's costs was induded as a ccs* of service proposal on principle.

in each rate case.

Tyrone Recovery Sought Time-Of-Day Rates Offered The company is pursuing regulatory Rate Design Change Asked authorization to recover the unomor.

White final regulatory decisions have n t been mode,in October NSP tized costs of obandoning the Tyrone Federal Department of Energy rate nudear plant.The costs are based on design standards call for cost-based customers were offered the option of NSP's application to the Federal rates, time-of day and load manage.

j wer electric rates if they would Energy Reguiotory Commission ment rates and rates which encourage -

shJt a large part of use to off-peak (FERC) and the Wisconsin Company's conservation. NSP favors this, too, dem nd time from 9 p.m. to 9 a.m.,

application to the Public Service based upon octual costs of delivering or weekends and holidays. NSP's sup-Commission of Wisconsin (PSCW) to service to each class of customers.

p rt f time-f-day (TOD) rates is

- amortize Tyrone costs over o five-Ccm em about the standards' effect part of a national pattem of rate yaor period beginning March 1979.

on customer obility to pay brought reform oimed at minimizing peak The Minnesoto commission has not public porticipation in rate proceed-

- electnc generation loads by level-yet taken a position on the Tyrone-ings in 1980 to on o!!-time high.

ing demand.

related costs in our current rote cose, The TOD rates are cost effective and the PSCW has determined that for homes with above...arage electric costs allocoble to retail customers ii.

Nuclear Decommissioning yse and for some commercial and industrial customers, although custom-that state may be collected under the Considered terms of our filing with the FERC.We ers pay the cost of odditional meten'ng. Under the program, charges remain optimistic that we will be able At the request of the MPUC, the are higher than standard rates to recover o substantial amount of the Tyrone abandonment costs C *P "Y.hos submitted recommended during the day, but lower at night.

changes in the estimated cost of through increased rates.

decommissionmg its nuclear plants While the company expects -

t the end of their usefullife The FERC will recognize most of such proposal also indudes a recommended changein the method of recovering 1980 Rate Increase Program Annual increase Requested Allowed Pend.aa 1980 Revenues sto+us

(%Hoons ol do%rs)

Electric-Retail Minnesota

$ 77.5 5 77.5 S 29.6(B) Rates effective 7-30-80.

North Dokoto 6.2 5 3.3(F)

O. der issued 12-31-80,Tyrone amortization under litigation by Company.

South Dokoto S1 2.4(F)

.1(F) Settlement order issued 11-19-80,Tyrone amortization under litigotica by Company.

Wisconsin 20.7 6.4(i) 14.3 2.8(l)

Interim rates effective 7-9-80.

- Electric-Wholesale Wisconsin

.9

.9

.5(B) Settlement agreement of $0.7 million, subject to FERC opproval.

Cas-Retail Minnesoro 11.0 11.0 20(B) Rates effective 10-28-80.

North Dokoto 15 1.5 Wisconsin 1.4 1.3(F)

.2(F) Order issued 11-12-80.

Heating-St. Paul

.8

((l)

.3

.2(!)

Interim rotes effective 10-15-80.

1980 Tctals

$125.1 5 13.9 5105.5 3 35.4 8 Denotes fuled rates underbond subject ro refund i Denotes intenm rates sab ect to reo,d t

f Denotes funalrates 8

A

20 percent of NSP's fotoi owned joining this company for o moximum NSP Opposes Rol ed-in Rates capacity (about 1,200 mw) would coverage over a two-year period be lost. This capacity is used of $70.2 million for Monticello and Retail natural gas rates on the _

sparingly now,in peak periods

$62.4 million for each of the two NSP Midwestern system (Canadion only.

Prairie island units.

imports) are nearly double those for

-. About 300 mw of our cool-fired customers scppfied by Northem cooocity soon will be more than 30 Natural (primarily domestic gas)-

years old.These units may not Nuclear Spent Fuel Stored Customer complaints about the perform well or could be limited by difference resulted in hearings before environme,tol restrictions in the Minnesoto's Environmental Quality the MPUC and the North Dakota -

future.

Board hos issued on order oronting a Public Service Commission on Hearings will begin in 1981 certificate of need fordoubling spent wl. ether the company should be before the MEA to modify the Sherco fue; storafant by a plan to re-rock e of the Proirie Island required to overage (roll-in) its 3 certificate of need. Each participant nudearp not:erci e as purchase costs for both will be responsible for justifying its spent fuel more dosely in its storage piperine te cetermine rates.The own future power needs.

pcots, comport opposes this os However,in connection with impr,per rt te-makin concept.

- this proceeding on oppealis pending Ruhngs are perding rom both Tyrone Site Preferred in St. Paul District Court challenging commissious.

some of the regulations underwhich The Wisconsin Company named the the certificate was granted and Sherco 3 Modification Asked Tyrone Energy Park site near Dt. conj, contending such storage

ermanent, Mconsin, as preferred site for o and therefore requires leges ative proposed cool-fired plant to be OPproval.The Nudear Regulatory NSP opplied to the Minnesoto constructed in the early 1990s,with a Commission is considering the Energy Agency (MEA) to modify the site near Wheoton, Wisconsin, company's request to construct the existing certificate of need for Sherco 3, os altemote choice. In 1979, the expanded storage and a favorable 800 megowotts (mw), the third Wisconsin Public Service Commission decision is expected in mid-summer. -

cool-fired generating unit at NSP's denied the construction of a Sherbume County facility.The proposed nudear plant at the Tyrone modifications,if approved,will allow site, to be in operation in 1987, LSDP Affiliation Pending Southem Minnesoto Municipal because need wo; not established.

Power Agency (SMMPA) to own 300 The Tyrone site meets or exceeds The company and Lake Superior mw, and United Minnesot all siting criterio and would be the District Power Company (LSDP)

Munic pol Power Agency (UMMPA) least disruptive to its neighbors, agreed in 1977 to a plan for offiliation to own 49 mw. NSP would retain the Wisconsin Company said.

of the two companies.The Securities ownership of about 450 mw of the and Exchange Commission (SEC) 800 mw unit, of which 20 mw is available to Lake Superior D; strict hos held heorngs on the application Insurance Costs Soar and on order is pending.

Power Company (LSDP).

LSDP,headquarteredin Ashland, Recent trends in electric use on As a result of the Three Mile Island Wisconsin, supplies electric or.d the NSP system make it possible t allow these other utilities to purchase occident,important changes natural gas service to about 40,000 a portion of Sherco 3.The modifi-occurred during 1980 in NSP's customers in northem Wisconsin cation would etminate the need and insurance program. Premiums for and two counties in Michigan's the environmentalimpact c,f roperty insurance at nudeor Upper Peninsufo. In 1980 its operating constructin o mw plant in southern generating plants increased 55 revenues totaled $41.4 million.

Minnesofo y -. g the existing percent and nudeorliability premiums, Sherco site.

16 percent. In addition, U.S. utilities o eroting nudear plants formed a Communications Promote The company has several mutualinsurance company, Nudeor Acceptance reasons to continue its ownersh..ip in Electric insurance Ltd., to spread Sherco 3.

the risk of increased costs of replace-NSP maintains a continuous flow o Construction of the unit will lower ment powerin the event of on of corporate and energy information product on costs of electricity by extended occidental outoge of any to cusomers and the public within replacing both oil generation and such plant. MPUC approved NSP more expensive cool units on NSP's system-o savings to NSP customers over the life of the plant.

o if oil becomes prohibitively costly or unavailable for electric generation, 9

its four-state service area. It answers Corporate re!ationship with survey porticipants. Reporters and specific quotions and oMers energy Twin Cities reporters and editors was editors volunteered NSP as one of assistance while explaining company rated Jghly in a recent survey.

two top Twin Cities agencies or aims and policies. More than Comparag overall communications compomes in effective medi.

350,000 printed brochcres prepared eil orts of govemment agencies, communication, citing 24-hour a day by NSP were circulaied to customers utilities and other large local corpora-accessiblity of media representatives in 1980.This public contact was tions, the journalists said util ties and their prompt and knowledgeable ougmented by film and slide presen-generally, and NSP specifically, were responses to questions.

totions. A group of knowledgeable doing the best job of keeping These results corroborate an employees spoke to a record 567 the public informed.

earli. - survey of NSP customers who civic and privete organizations in The company was mentioned gave Me company fourth highest 1980, and 253 tour groups visited spontaneously by 68 percent of credibety among 12 local corporations.

five generating plants.

Fjnancial Estimated cash requirements for Industry Performance 1981 include $290 mulion for construction and $32 million of in 1980, the electric utility industry concellation payments for the Tyrone continued to show poor financiof he company has performed nudeor plant. (See page 29) It is performance. Return on Oguity will be m, better than the industry in the post expected that these requirements will the il to 12 percent range *or the eighth and it is expected that its performance be met from internally generated straight year, and eamings per shore ore will continue to be better in the funds, sale of $75 to $125 million of eshmated to decrease by o bout I.5 futum.The company's construction and mortgage bonds and proceeds from percent. The continuotion of poor financing programs are relatively earnings performance was :oused modest and its financial flexibility primarily by record high levels of will allow issuance of securities on inflation and interest rates, c relatively reasonable terrrs.

1981-1990 smallincrease in kilowatt hcursales in 1980 NSP construction Construction Expenditures ond insufficient rote relief by regulc* ors.

expenditures were $222 million, ju M

Dividends are estimo+ed to obout $9 mihn less than for 1979.

b increase by about 3 percent in the fate About 89 pe. cwt of the 1980 3 )

of rhot earnings decline, increasing th3 expenditures were provided by industry's payout ratio 6om 77 percent internal funds. Funds for the balance in 1979 to about 80 percent for 1980.

of construction costs,$37 million 4

The eomings decline was to buy 1.5 million shores of NSP

=

occompen ed by deterioration of common stock and $7 million for p.

) -g earnings quality Non-cosh allowance acquisition and retirement of other for funds used during ccnstruction (AFC) securities, come from three sources:

2 ye +@ Qj _2 occounted for nearly 52 percent of a $63 million increase in short term Od" eamings per shcre-the first time AFC borrowing, a $1 million decrease in was overhalf of reported eornings.

temporary investments and issuonce 8: 82 83 m 85 86 87 88 89 90 Because of high interest rates and of $4 million in new stock through the poor earnings performance, the market Employee Stock Ownership Plan (ESOP) and Dividend Reinvestment the sole of about $17 million of price of electric utilities fell by 4 percent and Stock Purchase Plan (DRP) (See pollution control bonds. NSP expects during 1980. This poormarket performance kept the overage market Capitol Structure on page 11 for a short-term debt to be from $25 to discussion of common stock.)

$75 million by the end of 1981.

price to book value at about 75 percent Financing for the 1981-1985 in 1980.

period is expected to be relatively Moreover, the industry generated only about 34 percent of its construction Harry W.Spre5*"'-

light-about $450 mifion-with ell expenditures internally end had to sell

{"j'jc' internal funds providing about 75 about $15 billion of securities to finance percent of total construction expenditures of $1.7 billion. Internal the remainder of its needs. Of that F

2 amount, about $s Milon was common

[

^j fonds generation of 75 percent compares very favorably with stock, which was sold substantially

[

below book vclue.

I

.k; industry estimates of only 40 percent.

1 a

o 10 1

From 1986 to 1990, however,.

important measures of NSP's ability constoction expenditures are expected Financial Objectives to retain the high quality double-A to jump to $3.4 billion,of which bond and preferred stock ratings it Sl.5 billion will be raised in the capitol hos held for more than 30 years.

markets.This reflects o !evel of Company financial performance intemol funds generation of about 55 must be adequate to market securities at any time and at reasonable cost. To assure this Capital Structure pedorman:e, NSP sets financial Construction & Financing objectives based upon its own Forecast studies and discussions with bond The capital structure is the total (Dollars in MAons) roting agencies, investment bankers, amount of money invested in the commercio! bankers and rate of company through various securities.

~m w F nds o,.g New Fmoncmg A large amount of total equity-retwa experts.

mo While many financial measures p rticul rly ccmmon equity-ossures P DJ ore im ortant, the key ones are NSP greater flexibility ond its creditors rn re protecti n.The ob,gective level

$360 t capito structure ratios, bond interest r'%"

coverage, earnings per shore growth I ' c mmon equW is now 40 to 42

$310 s29ycsa,co and dividend policy. Generally. these percent f t t I c pit Iinvested in NSP e

s222 - M objectives are desigr 4 to provide c.

Capital structure objectives were r

reasonable return to sncuedders achieved in 1978 and maintained in

~

~

and keep the overall cost of money 1979 and 1980. EP's capitol at the lowest level consistent with a structure,with A percent in common flexible financing position. In the long equity,is stronger than the 36 percent g

g g

g 33 term, meeting these objectives should overage for the electric utility industry.

keep customers' rates lower than Ten-Year Summary otherwise would be possible.

During 1980, the cor pony ss.1 b.llion ont epo?ed between 198bl990 repurChosed 1.5 million shores of its 534 0 NSP's financial objectives are common stock and changed the DRP

-g r~

F j

based on on assumed overage and ESOP plans to use market stock t

inflation rate of nearly 10 percent rather than new stock.These actions snoo '

through 1985 and about 8 percent in were taken to bring the common

'7 the late 1980s, and on rates for equity roto in the capital structure double-A utility bonds that will back to objective levels. After the gradually decline from present levels concellation of the Tyrone nuclear eras 86 90 of almost 15 percent to 11 percent by plant and the delay of the Sherco 3 1990.The company continuously unit from 1984 to 1985,it appeared reviews its financial objectives, that the amount of common equity in m difving them os projections of NSP's capital structure would exceed percent of construction expenditures.

ec n mic, business and risk levels objective levels by as much as four Construction cost estimates induc'e 10 percent annual cost increcses changa percentage points over the next few through 1990.

- P'tol structure and bond years.

interest coverage are two of the most Moreover, the Minnesota Public Utilities Commission (MPUC),in a 1979 gas rate decision, set return leveb based on o common equity ratio of 40 percent. in the current Construction Schedule-Capacity Additions electric case in Minnesota, the est,mo.ea sc8eduiea amount of common equity in the St D%

capital structure is also on issue. The ko

• )

vel (MAons o

Plant and Location company used a pro,ected test year j

Sherburne County No.3*. 450 Cool 5 568

$1262 1985 "

with C2 percent of common equity.

Riverside No. 7.

60 Cool 48 800 1990 The Deportment of Public Service, on Jim Falls.

30 Hydro 104 3467 1990 intervenorin the cose, contends that Wisconsin Unitt.

.620 Cool 1204 1942 1991 40 percent is more appropriate.

• BCO mw vM wh 350 mw cwed Ly o+er power supphus (See page 9.)

• • The octual m semce do e *WI be depandeor on +e needs of the owners =dh Ac 6nal decrsron mode by Phe s

Monnesom Energy Ager cy our hoancral p annseg prowdes newb.hty far m serwce da es from1985-1987Construeon empendorums and amounn of hornung descobed elsewhere on +*s docun ent are based upon F981 m-serwce date.

1670 rve urnt wh 50.mw owned by Lohe Ss.,ponor Ontnet Power Company II

coverage and will require a strong year-to-year basis may be more or Bond Interest Coverage comn on equity ratio and a higher less than the objective range, on return ca common equity overage it should be within it.The c mp ny's ver ge p y ut ratio for The company's pra-tax bond interest the last three years and five years coverage should be at least 3.75 to 4.75 times expected interest charges Earnings Per Shore Growth was 67.0 and 67.8 percent to maintain a solid double-A rating respectively Company policy is to increase and assure financial flexibility-Eornings per share growth is largely dividends on as regular a basis as in 1966, NSP's bond interest dependent upon the return on com_

p ssible. Dividend increases hose coverage was 5.6 times. NSP's rnon equity (Return on common been declared at the June Bocrd of coverage dropped to 2.7 times by equity is the earnings available for Directors meeting in each of ine last 1974 as the capital structure common stock as a percentage of f ur ye rs.

weakened and interest costs soared.

the average amount of commcm This was an industry-wide equity)

In addition to the payout ratio, NSP considers the ratio of d;vidends predicament and many utility bond NSP's ob~ ctive is on average the common stock s book p io t and preferred stock ratings were growth rate o 6 to 7 percent per v fue when declaring dividends.The lowered during this time.

year,which requires on improvement r ti f dividends ($2.42) to common Since 1974 NSP has maintained in return on common equity to 15 to stock book value (year-end 1979) its ratings and reproved interest 16 percent.This compares with returns w s 8.9 percent.

coverage by expanding the earned in 1978,1979 and 1980 of proportion of common equity in the 13.3, '3.2 and 11.7 percer t NSP's payout objective of 65 to reactively It must be emohosized 70 percent is substantioliy less than hat our earnings growth objective the overage payout for the industry annot be reo!ized without a s a whole,which v cc about 80 Cap'stal Structur ubstantial improvement in retcrn on percent in 1980.The company Bond Interest Coverage common equity The current five year believes that its lower payout provides 1980 1981 obiec~e growth rate in earnings per share better potential for future dividend is nly 3.4 percent. (See financial growth.

Common Equity.. 41 % 40 % 40 % 42 %

st tistics on Page 33).

Preferred Equiry.. 11 % 10 % 10 % 12 %

It is important to note that the Reach.mg the Ob. tives oberm Debt.. 48 % 50 % 48 % -50 %

quality of NSP's earnings remained iec high in 1980. Allowance for funds Bond interest used during construction (AFC) was in the past, we have stated that nly 13 percent of earnings compared inflation and regulation are the factors taxf-4.0 40 3.75-4 75 P

with 52 percent for the electnc utiby that will present the greatest industry challenges to achieving good capital s tructure. Interest coverage is Electric utilities must earn returns financial paricrmance. The economic 4.0 times while comparable utilities comparable to U.S. industry to results in 1980 and the regulatory have an overage coverage ratio of compete effectively for capital.

cho!!enges during 'he year, both in about 3 0.We expect the company's Surveys indicate that most institutional terms of operating and construction interest coverage to stay well within investors believe that electric utilities of generating plants,and in terms of objective levels for the next four years.

have the same or more risk than rote increases, further strengthen our However, as construction and industrials.Yet while American position that inflation and regulation financing programs begin to industry earned 16.5 percent in 1979 will indeed continue to present our accelerate, our average interest rate and or. 3stimated 14.5 percent in greatest challenges.

(embedded cost) on all outstanding 1980, e,ectric utilities have been able debt is expected to increase to about to earn only about 11 percent during 9.5 percent by the end of the decade those years.

from 7.0 percent in 1980.This will put steady downward pressure on Dividend Policy NSP's dividend policy is based on an earnings payout of 65 to 70 percent.

While the payout percentage on a 12

Divisinn Op:rati:ns More than 1.3 milon home consi ction, load

,YMys manac,eme i and solar and wind I

ougg,,,g energy use. However, some changes

w. t (rong. 2Ats'.)

could increase future home electric i

i use: sut stitution of electric energy for customers in four states purchase 10.0 other fuels, new electric space c

3 i""]

heating insto!!ation and, possibly in electric, gas, steam and fe!ephone u *.*

I the future, electric cars. NSP service through 17 company 4

divisions. Seven divisions are 2to 2M -

antiapotes continued conservation zu, ";

i1 by home customers to decrease their centered in the Twin Oties

e Metropolitan Areo and the rest in l

overage electric use by 1.5 percent in 1

other cities throughour the NSP p

4 1981 and.2 percent the following service cret E

?

4 j

v-or.

n Our service crea added 16,781 Our total retail electric so!es in l

new dwelling units in 1980, a 1980 were 2.1 percent chead of 1L i

4 1979. Residemici so!es advanced 2.2 L

O La L uJ decrease of 27.9 percent from the 80 8

'O percent whi!e small commercial and 23,275 d,ve!!ing units added in 1979.

industrial so!c s increased 2.9 percent

.".w'l"'$$.]

This drop mirrored a decrease in and large commercio! ond industrial tweo+er wowee.

construction actrvity throughout the so,es 1.8 percent.

U.S. Al! NSP divisions experienced On a hot, humid Ju!y 14, Several factors will tend to c nstruction declines, ranging from demand for e!ectricity reached 4,873 hold down further growth in use by 51.2 percent in Nortn Dakoto megawatts (mw), o 14.7 percent each residential customer: increasing divisions to 3.8 percent in divisions jump frem the peck 4,247 mw cn costs, improved appliance efficiency, that serve Minneapolis and St Paul.

August 7,1979.The winter peak smo!!er families, fewer sing e family Throughout the service creo, the rate l

demand was reached January 9, homes, thermal efficient homes, 1980,at 3,909 mw, compared to oltruistic conservation, curtailed new b,873 mw winter peak the preceding year, an increase of only.8 percent.

Average annuct electnc use by NSP residential customers decreased mcgina!!y (.1 percent) in 1980, reflecting a gradvo!!y flottening use trend Over the post five years the Summer st rms splintered transmission towers.

overage annual increc se in use per g h _g 1. g y rj % M ? g y.; g/ g

gjpg, q;g;,,9gg N,epj 4;? : U;

, glp

.9 S, l-residential catomer was.5 percent; y

1. y

Tv W j,q'qn 3,gh W, over the lost 10 years this was 1.2

,yll.,g g; 4*M. C.g.if,;

percent and over 20 years,3.4 g? " N fi.. g.f M 7/? Q* g M

gj; g

g' g W;g;Qf,M y,Q/QM%,$v.a ercent. Customers without space I

rt QQ Q., h. t.6Q p

l1 eating had an average annual

$Q.

ge eM 4M4,s# WW gdp$ ;.Y" AB p}c @

b decrease in use per customer of.2 l

I f

, g "; * $ g {5(p h b ~ f.'<fh.Id"y Wfy# "@%

h,Mk[/ ',!

percent over the past five years.

j g

5 M'O

. M

./

in the same five year period,

/Mb $8 k(<y$ply*)

Q 9,

(d.1%$ j% # 3p/M residential customers with spcce Ji d 'T?r W [4 =$G.k9f.jd.7/(

heating had on overage annual w,d

.g 'T ih o h.DQ _.-ggVg. T@N M d@h M M M D

decrease in use per customer of 3.2 (S

/C N% FP s - 4 4 Y. v A *s s h w f,

percent, and 4.1 percent in the lost PQi NIk$$$Nh,w$y two years.

Wj Q arr qtc, gg5;Wll y

%w 4

m M; W p-

,Wgh q,r d i2 g

_w &.. g fT*,"

'. M

• 4fiw 'ike@9 g M

n m

Mt v y,W,Mh y

.M

- g Ralph O. Dunconson e

%' M ip M&gg,R,k % %

gj g

g.,QM y

Semor Vce President-y, g

{s y-7 pg uso -,

E $

hBi$y 2dhhbAM$hhiM 13

~

of sing e family housing additions in added continuously to the library of t

1980 fell 30.2 percent and multifamily,

St rms leave Heavy Damage fopes available. Answers on solar 4

units,25.8 percent.

energy, electric oppliance operation A total of 5,318 electrically On July 15,1980, a sudden summer costs and insutation benefits were heated residences were added as storm began in Minnesota with on 85 most requested.

NSP customers in 1980-o 18.8 mi!e on hour wind that swept into percent drop from the 6,547 odded Wisconsin picking up speed to of in 1979. Port of the slowed electric feast 112 mifes on hourof Eau Coire.

Home Energy AuditTested Some 150,000 persons in the bordest-hit Wisconsin cot nties lost electric power,with 90 to 95 percent Foriboult and Northfield home Growth in Residen+ial Electric of Eau Caire without service.More customers c re testing a new, hushners than 60 doub!e-pole 345-kilovo!t (kv) vofuntary home energy audit transmission line structures were program which NSP will extend to Nusonds a custom tomog.)

shattered along a 10-mile stretch.

-o'her residential customers this year.

The audit involves a detailed home Em Five major and o dozen smolfer l

M5 6 d transmission lines were knocked out, inspection by a state-certified NSP U ibV and domoge repairs fo!!owing this auditor who will recommend energy n

!b j storm for the Wisconsin Company rel ted moddications,6en estimate F" k R4 alone were over$4 mi!! ion.

the cost and saving s from such home impr vements.The customer pays u[

[ E N. IU V This " big wind" was the worst in nly $10 for the survey, with and C E;5 [id LJ o summer that hit NSP's service oreo rem ining c sts bome by oil rate with 22 domogina storms. Repair P Y*'5-

"" " C" "

costs were the greatest in the N,21300 company's history-two and one-ho!f Mondeed by state and federof 7

j in ~l 18000 m a mm.a times customory costs of a total of conservation regulations, the home goo 1FlT 3

more than $7 million. In addition to energy audits win be offered to ol!

FM t

r

?P li A i 4LM initial restoration of service, future ther customers over a two-year i

E 4 ir 1

l costs are offectad for tree trimming period offer the pilot program is I

"h.](

l long offer the crisis.

CO*P eted-b$i a1 p

1 j h4 L

f1 i

Crews from oil ports of the d b LM L j company joined local workers to O-J b

+

restore service o ter each storm, and

, Energy Poor' Get Help 8

i division personnel often worked wr.ons ovea sdes mo long hours under difficult conditions.

As energy cost increases, some

_!53 t,

customers can't meet winter utility bi!!s. Minnesoto's Public Utilities

• ' s fj];

d Need Help? ASK NSP Commission (MPUC) prohibits disconnecting utility service that m!

4 of l ' t I j

Service to customers trod;tionally offects the primary heat source mm wasiid kJ L meant providing reliable supplies of betwee-October 15 and April 15 if ur -

energy to homes and workplaces, the customeris unable to pay and 70 75 80 85 w

but in the 1980s this service takes on tranges with N5P to pay by a home heating demand is due to con, new dimension-he! ping customers negotiated schedute. The company struction of fewer new homes, but a c nserve energy and keep costs ssists by referro! to agencies which smaller percentage of new residences down,both for themselves and NSP.

'd 'n poving fuel bills.

cre using electric heat. In 1980,19 A new public concern about energy resources and use i-tensified by percent of new dwelling unit investment in Conservation customers induded electric hecting, climbing cost and curtai!ed supplies of fuels.

compared to 22 percent the previous year.

NSP responds to the demand In o pilot progrom to determine steps imployees of Division Operations for energy information through the NSP and other Minnesoto utilities con respond directly to vcried customer "ASK NSP" service hegun in 1979. Calls take to cut energy waste,the MPUC needs and problems, and they pro _

in 1900 more than coubled to nearly v :ted three NSP proposals for Ade the company with a continuous 57,000 inquiries. New messages are udl limited demonstration projects.

perspective on local deveicpments One involves company rebotes of $50 to $100 to Minnesoto that offect energy planning.

bl m.

WN

_ g r g g~

P 7 y f %

were selected to encourage similar m

'e renovation of the area's basic

~

j housing stock.

e;,, '

*b

'g~

.M Meanwhitc studies of potential I

1 s; J)-

' 89 V {::

I.

by@1, ' j

~

altemative energy sources are being k[

f tested at t';P centers for public

[ - [' ~ w benefit.

u; g

g "-

In 1980 o variety of solar water R

A heating systems were installed 4Q*

j gg provides up to 70 percent of hot at five division service cen+ers. Each L

hy '[r hs monitoring equipment gives extensive water used at the centers. Automatic M

Q ] l' p

Ni performance information.

dM

,dA M The company otso is turning to

/ y'),f.ed d,'

. j hth oS[ N 3

o! ternate fuels for vehicles to reduce t

rhi.

J /

h

'V transportation cost and dependence j

on gasoline. Over the next five years, T.:-

%$^

ipg investment in propone, diesel and v

9 -.

electric-powered vehicles could save r y fj 1

more than $5 million. By next June, ao P

4 765 corporate vehicles will be

-.f 4 /* -

g converted to use the cheaper, clean

'o 4

x Ei and plentiful propone. Minot

[, ca -

k

(..,..

^ $ c. $'4t.

6M&P Division's tefephone fleet o! ready is

g, -

?

I qi([% h %%

converted to propone.

U eM i [g

.h3 The company now is negotiating fd*{!

iW J y,3.., s i

with the federal Department of

+

/M1 Ob s#dI 314QEluhii;&galt Energy to participate in a 50-vehicle e!ectric fuel demonstration program.

NSP's fleet is adopting a new identity and new uels.

Over the four years of the test, the 50 T

vehicles would save some 220,000 gallons of gasoline,for $264,000 in reduced fuel costs.The electric fleet would use about $22,000 in efectric customers in the Moorhead and conservation improvements that meet East Grand Forks areas who invest in minimum cost-effectiveness criterio.

insulation or furnace equipment The company will defer principal and NSP Maximizes Potential recommended by a Residentici low interest pas nents by home-Conservation Service audit.

owners until the oote or transfer of the A second rebote program wi!I homes.

Electric generating plants produce reimburse customers for port of the Evoluotion of these three heat that con be used for purposes unrelated to electric distribution The cost of high-efficiency efectric company investment programs will appliances.The rebate is based on be made jointly with the Minnesota She.o plant attracted wide attention Y easing land to greenhouse l

savings to the company through Energy Agt.. icy and the MPUC.

shoving its peak demand, thus

<Ter ti ns f r cultiv ti n f fl wers, postponing future added generating nursery stock and vegetables using w rm waterfrom the plant.

capacity For the limited pilot study, up NSP Conserves,Too to $3 million would be invested by What's new in Sherco s warm the company.

water? Today more than 1,000 young The company bought one existing catfish are gliding in water from the NSP also was ordered by the residence in south Minneapolis and MPUC to negotiate with the City of n n Eau Claire to remodel as St. Paul to plan a program for investing in qualified test homes for demonstration centers for ennrgy c nsewohon ideos and materials.

space and water heating Customers are encouraged to use these centers for technical information adoptable to other existing structures. Older buildings is

\\

1-U-

"e s

closed-cyde plant cooling system.

N Purpose of the experiment is to test

,3

,4,,

~

whetheraquacult e-commercial fish forming-con be ssccessful in this W

^

g ys

-y

i' wcrm ensironment.

~f

\\g New Businesses Explored W

.f g The company's strategy for the ne future includes not only expansion of

,' 7 W~V e

4 its traditional public utility business.

?'

f A diversification program was estab-p lished in 1980 to consider the emerging conservation and o!temative enerqy industry Market studies to Cmcc'

-ym identify, evoluote and develop new l

~'

bl MP,

]

opportunities for NSP are under way.

' $gjf j

Alternative energy sources, J'4 N b/$

"4 incineration of hozordous wastes from industry, district heating and 4"

industrial heat suppiy, marketing dry A

p

^ '

pulverized cool, energy consulting or

~,

operation of energy services,and e,

Q $g*

%,]4 telephone remote corr

.. cation services in conjunction with load management are among options (p -

y{-

being studied. Emphasis for all new business ventures wi!l be to make greater use of existing NSP

,esources-NSP officials begin aquaculture test.

Corporate Services Corporate Services percent decrease from 1979. Sales to Gas Supplies Are Ample heating customers dedined 7 percent due to warmer than normal weo her and increased customer conservation I

NSP distnbutes natural gas to me,e efforts Gas sales to interruptible indudes gas utility operations, human than 270,000 customers, seung 81 gas customers (primarily large com-resources,information systems, communities in ports of Minnesota, mercial and industrial users) increased buildings, purchasing supervision, stores Wisconsin and North Dakota. G.,is 8.5 percent, since adequate gas and inventory of needed equipment.

purchased from two sources-supplies were available to them Northern Natural Gas Company thrc> ugh lower requirements of gas Omaha, Nebrosko (primarily domestic heatHe customers and adddional gas), and Midwestern Gas p;pe,,, copplies.

Transmission Company, Houston, O,i January 6,1981, NSP Texas (o!! Conodion gos). About 85 had a record natural gas sendout of percent of our customers are on 438,000-mcf, topping the previous the Northern system.

record of 422,000-mcf January 15.

Harriet B. R xjge We added more than 10,400 1977.

Mce President-residential gas heating customers in Aver e c st to NSP was Administronon 1980. Of these additions, opprox-

$2Wmd from Northern Natural imotely 8,000 converted from the use nd $4.52/mcf from Midwestern 3

of o'her fuels, primo 4y c41.

Total gas sales were 71 mi!! ion-mcf (thousand cubic feet), a 2.9 1

16

during 1980. Since 1978 the average management-by-objectives, cost per mcf has increased at on Relative Cost for Home Heating bringing the total to about 1,000 B $'d " "*""9"b'"' 5Y5'*""

graduates. In oli,2,500 employees overage annual rate of 21 percen; from Northern Naturai and 37

.""""7Ll

, j,,

completed professional, technicol 2

- u dwevent Nero! Gm and voCotional training Courses percent from tCdwestem. We expect costs of both domestic and Conod:an

"""" O '"l"j 74, to add to their knowledge, skills and potential gas will continue to increase with the phased deregulation of natural I5" NSP's strong affirmative action i

employment program continues with 90s in the U.S. and the increase in Canodo's OPEC oil costs.

!siooo

~

good results.

Natural gas reserve additions

[

Employee efhciency is reinforced bg through the reorganized Social "g"

..... - = = = " 'Y improved significantly as a result of I

-^ #

Resource Center and Training phased c'eregulation of newly

[-- """""",,,,,,,,,,,,,,,,lo n m an m mmr **" !l to meet social, physical, mental Department.There the compor.y trio discnvered natural ges. In 1979 the additions were 35 percent higher I

health, cFemical dependency and than the previeus yecr, and the American Gas.%ociation (AGA) 1__

b-82 I

development needs of employees.

so si anticipates that in 1980 or 1981 reserves additions in tFe lower 48

$,1[,'c' "Jj,*M'ECEl((Ex states will equal consumption for the 75*. No. 2 Heohng Od Annvoi cost based ori rofes NSP Offers Flexible Benefits first time since 1967. AGA predicts

'a '"ec"" > "aW 'ac" re d ' 90 '*"'oa 8'"

h*""8"""""*"'

consumption can continue at least at kMy r the company offered present levels for the rest of this flexible benefits to non-union century moratorium on new natural gas employees (benefits for union Wisconsin s Public Service hookups and giving NSP permis3 ion employees are acgotiated). Because Commission in 1980 opproved a to add customers in the La Crosse o unifarm fringe benefit plan doesn't contros i service plan ending a area on the Northern system.

fit the specihc needs of each employee, workers were given the chance to select programs in Growth in Gas Customers Employee Competence Renewed medical, disability, vocation and and MCF Sales retirement /sovings beyond the basic Thovsonds of Custorners loverage)

NSP's 6,965 benefit employees protection of the company's 315 routinely improve and expand their minimum plan. Each option has a 29s r 265 2

job skills to maintain efbCiency in price, and workers were assigned zu company optronons and promote

" flex-dollars" depending on age, 240

~

safety for themselves and the public service and other factors.The Our medical and technical system for innovative program wil! be reopened employee safety and heo!th annually to all eligible employees.

requirements is fully staffed and NSP's program is the most extensive i

~. "

~

operat5nal. Safety-consciousness flexible beneht plan in the utility resu!ted in a 12 percent reduction in industry MCF per Customer our lost-t;me ratio in 1980.

330 30s A new leoming center at the Informotion Reseurces Merged t -

268 corporate headquarters tailors 250

~r employee training to individual needs 235 and available time.There a computer Information Systems is the result of a 4

~3 system substitutes for a teacher, G80 conschdation of computer and offering courses at the student's pace office systems functions to manage and time. Others continue their corporate information resources and educo' ion using videotapes on o associated computerized systems.

^

wide variety of work-related sebjects.

Calculation and issuance of Mdhons of MCF sales p

6 70;8, [3{, 71.1 Resources for Individual Devel-of shareholder dividend checks and opment of Excellence) management corporate rer rd-keeping is handled development courses were cum-efhciently by computer 'hrough p!e:ed by 314 managers during the Information Systems.The department year, and 130 odditional managers also operates the computer system, were trained in the Integrated develops computer oppwotions and

^

g ;

Management System, a versior. of 4

/0 75 80 85 90 17

provides office services, such as different reguistory and financial departments are now housed in word processing, internal printing, agencies or do corporate strategic leased offices and added space will mailing and document-copying.

planning.

be required soon. A long range study Information Systems also is of space needs to the end of this responsible forlong range planning, centurv is under way to design and operation of the Office Space SNdied accommodate growth as well as to computercommunication network provide a secure operating envir nment f r the data processing needed to provide timely corporate

$nce the corporate headquarters functi ns nd system operation.

data for depo %nts which deal with building opened in 1965, personnel there increased by 65 percent. Some Energy saving has a high priority

. the all-electric headqu,rters,where in total use has dropped 10 percent since 1976. Over the past two years significant gains were mode theough.

Corporate Structure an energy recovery system to use heat generated by computers.

Energy for electric space heating dropped frc.n 1,715,000-kwh in 1978 m_,..

m y

to ll0,000-kwh in 1980' 1 w. l. seneses.....

Oce President-Pesonnel j

&sonnel resource ed Devebpmere a

In Winona, Minnesota, a new

• =* *" '"o "c *""*"'

'"**"d i

d sobrae and s"afex onwnsaiun and swes a!

division service centeris under construction to consolidate operations t

a L. n at am :~a w J there in a single building. Comple-tion of the $1.4 million project is m. _,,

m.m.---

@ H.3.'Regge.

.'f l

expected in May,1981.

l

%, c3,,, Administration ^

.i Vice President

,,,.m.m

_. em

% og,c,j O.iV. McCarthy embos.ng propony and securny. s,

'l i, Board and Ch.ef :

F suggesnan Program '

~

Minority Purchasing Stressed shaoter 4cw.es. Emptoyee : -

m choirmon cohe y

t, Esecutive Off.cer.

3 q

L in addition tc its Equal Opportunity r, -m m,-y,e,

[; +

E s. A.aisi erd..

.j Emdoyment policy, NSP corrics on

) ' seniorVice President Corporate Mfoirs 4

on active program to purchase a

roeday taneng, e.gubery ceeptyce.

.a u

w-c ana.cJ coenmene Aso,rs. coe ases, J supplies and services from minority p; tood ses. orch.tegal Anoas,insurora..

vendors and contractors. About 45 m 'P '*' 5'c*'Y 3

minority firms got contracts totaling

' C*

m.

wa g:mm,

~ume y

also supports minority businesses

' O.W. Angland

~ -

9 through the Metropolitan Economic Esecutive Vice President. -

3 co,,,xo.e SW and PW fnugy i y Development Association and the

%nmg and arsearch, suena orwicy-r 1 Minnesota Minority Purchasing -

'"cd'a'5 ""'"9 L l

Council. NSP, Northwestern Bell and L. adfid a ma~ uacd 3M Company cosponsored a cor rate / minority business rm s

- m _ _'~ _

,,H.W.5 pes.

.j exc ange day for the Council on C.seniorv.ce President-Finonte' m

,g October 8.

m &-+a;m ~.

..m J Budgenng, Econcrrwcs, fnoned Pbnning, 1

e i Accounmg and Treasury, Gas Pbnewng and - j

" ? c, g, w :

t SW r. aniormemon Syvems j

d President and ?

I

(

E(Othcer-g; d k

+

~.

?

? sJhief Operotmg -

~ d

f. w-mama wi. w-e Le 2

~

t v,

.u-qq-w wrpat A-=-v p r>-e c. meg evg

?,

y2 D.E.Generse

(

,,.m y

H: seniorV e President-Power 5upplyn c,

3 d J fng'neenng and Canonoon, fuel supply '

7'

-C.

1

...a m. ai 1.1.

' ptner Procknenw, syvem opranon 7

wa so-("

Nedear Augubnory Comp #once 4&.s

? G a G u a.u aa k u.w d rm wmpm--m rw,

E. E.M.heinen.

wn sme:~m, ~m m

_i k

. :. President and '

= R.O.Deneanoen 4

I cn"g$'np

/j

,,n ; Energy hoger sr*, conmener%

l ! SeniorVice President-Division Operations d E

C'

Dwpen hogement and Support Servkas.: d y

q

.i i-U F[/U s

E,

3J L L. w w a n - +.; ; ].4 M M u.a. s.L x.3 18

4 5

Dircrtors and Offic:rs (as of December 3r.1980; Directors of the Minnesota Company David A. Christensen (45)

Clayton K. Larson' (62)

G. M. Pieschel (53)

President and Chief Executive Officer President and Chief Operating Offwer President and Chairman Raven Industnes, Incorporated Northern States Power Company Formers and Mechanics State Bank (Monufonurers of reinforced plosncs, sponswear Minnecoolis, Minnesota (Commeroof bon &)

S rin9 eld M'nn*50'o "d elec" c *P'"e"')

Richard H.Magnuson (55)

P Seoux Fo!!s, South Dakoto Vice President and General Counsel Margaret R.Preska (42) 2 W. John Driscoll(51)*

Land O'Lokes,1ncorporated President, Mannoto State University President (Food processing, markenng and (Insntuhon of higher educohor')

Green Valley Holding Company ancuhurol services cooperative)

Monkoto, Minnesota (Privo*e investmert firm)

Minneapole, Minnesot D. B. (Rhinda)tewoy foods, incorporated Reinhart (60)

St. Poul, Minnesota Donold W.McCarthy (58)

Dresident, N. Bud Crossman (59)t Board Chairman ond Chie! Executive Officer (WMesole focd distriv'or)

Board Chairman and President Nonhern States Power Company to Crosse, Wisconsin Gelco Corporation Minneapolis, Minnesota Dorothy J. Skwiera (44)

(Transponoton leasing, monogement and M. D.McVay (62)

Vice Chairman corporate semces firm)

President. Corgill. Incorporated Minnesota Corrections Boord Eden Proine, Minnesota (Internanonot merchont, food, mill.ng and (Store parole toord)

Dale L Haakenstad (52)t shipp,ng enterprise)

St FWI,Minnesoto President, Western States Life Insurance Minneapolis, Minnesoto Chairman Emeritus Company (t,fe insurance company)

William G.Phillips (60)

Robert H. Engels (70)

Forgo, North Dakoto Board Chairman ond Chief Executive Officer Rehred Chairman of the Board of the Robert E. Haugan (63)t International Multifoods Corporation Company President tfood processerg and marke$ng nampary)

Minneapolis, Minnesota The Webb Company (Pnnhng and pubhshing)

Minneapolis, Minnesota St. Poul, Minnescro Principal Officers of the Minnesota Company D.W.(Jack) Angland (58)

Dennis E. Gilberts (49)

Bruce A. Richard (51)

Executive Vice President SeniorVice President-Power Supply)

SeniorVice President-Corporate Affairs Wiley 1. Beavers (57)

Clayton K.Larson (62)

Harriet B. Rogge (54)

Vice President-Personnel President and Chief Operating Ofhcer' VKe hesident-Administrotnn' Arland D. Brusven (48)

Donald W.McCarthy (58)

Harry W. Spell 157)

Secretory and Financial Counsel Chairman of the Board and Chief Exe itive SeniorVice President-Finance' OHice' Roland W. Comstock7 (50)

Leo J. Wachter (61)

Vice President-Public At'oirs M. D. (Bud) Olson (61)

Vice President Power System Operonon and James O. Cox 153)

Vice President-Commercial Operations Maintenonce Vice President and Treasurer Geroid S.Petterson (49:

Rosanna Giombolini' Arthur V. Dienhart 160)

Controller Assistant Secretary Vice Piesident Plant Engineering and Robert E. Pile (58)

Shirley L Grich' Construction Vice President-Gos Pionning and Supp y Assistant Secretory l

R:lph O.Dunconson (55)

Arthur R. Renquist (60)

Roy H. Berglund SeniorVice President-Diwsion Operchons2 Vice President-tow Assstant Treasurer Directors of the Wisconsin Company John L Carroll (64)

Clayton K. Lars 52)

Ricird L Roehrich (56)

Petired President ond Cniel Executive Off.cer*

President and Chief Operahng Officer Vice President Personnel Northem Stctes Pbwer Company (Wisconsm)

Northern States Power Company (Minnesovo)

Northern States Power Company (Wiscons n)

Eau Caire. Wisconsin Minneopolis, Minnesoto Eau Caire, Wisconsin Chauncey J. Cooke (611t Ray A. Larson, Jr. (51)t Horry W. Spell * (57)

Former President SeniorVice President-Finance Eau Caire, Wisconsin Wissota SonJ and Gravel Company Northern States Power Company (Annescen!

F. Jerry Kripps (58)

Eau Claire, Wisconsin Minneapolis, Minnesoto Executwe Vice President-C,erations D. B. (Rhiny) Reinhart (60)t Edward M.Theisen mol North (

States Power Company (Wisconsin)

President, Gateway Foods, incorporated Presidenti and Chief Executive Ofhcer*

Eau Ou.re, Wisconsin la Crosse, Wisconsin Northern States Power Company (Wisconsin)

Principal Officers of the Wisconsin Company George A. Des Rosier (61)

John L Koplin (47)

Edwc.ed M, Theisen (50)

Vice President-Division Operotons Treawrer Pesidenti and Chief Evecutive Off.cer*

ArthurV. Dienhart (60)

F. Jerry Kri.,,s 158)

Glenn B.Thorsen (46)

Vice President Plant Engineering and Execu'. _ ince President--Operations Vice President-Finance Construction Richard L Roehrich 156)

Irene Shiffer Donald P.Jolstad (51)

Vice President-Personnel Assistant Secretary Secretary and Assistant Treasurer t w a r.,,c u,co,,,,m.,s % w,,co,v,smed 4W Ane.1980 9W 4e r980

's e',W w '980 hed er A r980 twee,of s,m Mr co=*

o% ve sud e

'Deded cMer,1900 SFedd ft emrer, f%Q f joeno% cq, 4W Amuory !980 19

Managzm:nt's Diswssirn and Analysis cf Financial Condition and Results of Operation outstanding common stock is now degree, depend upon increases in Capital Resources being purchased for the Employee customer energy usage and the Stock Ownership Plon and Dividend obihty to increase prices os needed Reinvestment nd St ck Purchase to offset inflationary cost increases NSP hos a continuing need for cop;tol Plan.

and the cost of meet.ng government to finance its construction program.

in 1980 construction expenditure 3 regulations.

Since the Arab Oil Embargo of were $222 midion, of which 89?8 was b.quidhy 1973-74, prices of oil forms of energy provided by intemo!!y generated funds The 1981 budgeted construction have risen and consumers have expend;tures are $290 mWion and An electnc utMy's liquidity is a responded by conserving on their energy consumpt on for the five-year the budgeted expenditures for the function of intemol funds generation, i

hve-year period 1981-1985 are $17 occess to the long-term securities period and-ng in 1972, NSP's growth oWion. It is estimated that 70*o of market,and the ovadobdity of short-rate in retod electric sales overaged the 1981 e> pend,tures and 75% of term debt credit foakties.

8.596 per year. In contrast, the gIowth the 1981-1985 expenditures wdl At the end of 1980, rote from 1973 through 1980 be met by interno!!y genooted funds.

opproximately 48% of NSP's total overaged 3.296 per yect. Sales growth In addition to the construction capitol structure was debt, which is for the post three years was 2.1% in pruqrom, $46 milhon wal be required relotvely low for the utihty industiy 1980,4.1% in 1979, and 4 8% in 1978.

dun'ng the five-year period 1981-1985 Compared to the electric utility Growth in 1980 come from on to retire two sen,s of motoring first industry, NSP has o relatively low increase in the overege number of mortgage bonds and to meet sinking debt ratio, odequate interest customers (2.3%) whi:e overage fund requuements of the redeemob!e coverage, and f avorable iritemol annual use per customer showed httle preferred stock and Wisconsin cash generation. C;nsequent!y, NSP change due primonly to the economic Cornpany first mortgage bonds The expects to have access to long term recession and conservation. Even Wisconsin Company wdl also need debt markets on terms better than the though a general economic recovery

$32 mi%on to meet the accrued e!ectric utdity industry in generoi.

is assumed,it is expected that 1981 estimated concellation charges of the Short-term debt of $84 million retail kwh sofes wdlincrease by only L7% ver 1980 sir,ce new customer I

Tyrone Energy Park Nuclear Plant at the end of 1980 represents about (Tyrone) 4% of total capitalization. At the end dd'tions are expected to drop due t

c niinuotion of the depressed For the five year period of 1980, NSP had $110 mWion of 1981-1985,it is estimated that NSP credit lines with commercial banks.

housing market.

Kdowatt hour soles to other vd need $450 muhon of externo!

financing. In '981 NSP plans to issue utikties declined by 17.6# n 1980,

$75-$125 mihion of first mortgage Results of Operation 30 69a in 1979, and 12.0%n 1978.

j bonds and oppioximately $17 midion These declines were poitiofly l

neut W t I wededrk demands l

of podution control bonds. Addtiona NSP's 1980 earnings per shore of througheut the Upper Midwest financings in succeeding years would

$3.23 ($.57 per shore result from rate s o resuh of tonma gn be irnp!emented so that the corporate increases subject to refund),is a c nm h n nd Me geneal obbctives for capitchzation ratios con signif: cont decrease from the $3.51 cc n mic ruessi n. Sales to other be maintoined Currently, these and $3 39 earned per share in 1979 utihti s Is dechned as more of capitobzotion objectives are 40-42%

and 1978, respectively The comings NSP's generation was required for its common equity,10-12% preferred decline resulted from inflationary wn cust mers, which left only higher stock, and 48-50% debt.

operating expense increcies in o!!

pric d energy v d ble for resale During 1980 the Company creos, including the rapidly increasing s, the addition of new generating purchased 1,500,000 shores of its cost of complyin cikhes throughout the region regu!ations, whicS with oovemmentoutpsced higher common stock in market transactions r duced the need of other utihties to for a total cost of $37 million which revenues resulting from rate increases it held as treasury stock. In addition, and modest sales growth.The financial results of NSP, to o large 20

purchase energy So!es to o*ber opproval. See the table on Page 8 20 9% :n 1980,8 7% in 1979, and othes were curtoJed dunng the regarding the status of the 1980 8 2% in 1978. These expenses have surnmer of 1980, because one of the ro'e increase progrcm.

been impacted significant!y by severe summer storms knocked out o E!ectric producton expense in!!aton and increased regulatory-maior transmission interconnection.

includes fuel for e!ectric ceneroton related expenses Inf!aton has The ability to sell energy to other and purchased and inte7 change increased the cost of oillabor, moin-utilities was improved somewhat by power, white gas supply expense is

'enonce matenols and consultant the completion of the 500 kdovoit shown as gas purchased for resc'e se vices in additon, increased interconnection with Man;tobo Hydro on the income sta'ement. Both gas expenses have been incuned as o resu't of operat ng and maintenance in May 1980. NSP expects soles to supply c,H e?ectric produc' ion costs i

other utMt;es to increase by have incremed during the post three projects prompted by the Nudeor 8% in 1981 over depressed 1980 ! eve!s-years. The increases in electric Regulatory Commisson (NRC).

Gas mcf so'es decreased by production expenses con be Generating p! ant cperoton and 2.9% in 1980, but had increased attnbuted largely to increases in cool maintenance expenses increo;ed by by 69% in 1979 and 0 o% in 1978 The tronsportaton rotes and to the cost

$21 micon,or 25%in 1980 Of this level of gas mcf sales in any year is of fuelitself. Ahhough NSP's 1980 increase, nearly $10 m&on was o impacted by weather cor ditions. The power plant performance was Jaove direct resu!t of NRC prompted temperature during the 1980 heating historical indusny overages,it was maintenance season was obout 9% warmer than below the exceptional performance Depreciation and amortizaton 1979, which was o primary reason experienced during 1979. This drop in increased in 1980 and 1979 compo*ed for the 7.0% d op in mcf so'es to power plant performance resuhed in to 1978 because of the amortizoten heot'ng customers in 1980. Customer on inemose in production costs for of the costs relo'ed to abandonment conservation (forts have and are 1980.

of Tyrone. This pro;ect was expec'ed to confiroe to have o Gas supp!y expense hos terminated in 1979, and the re!ated depressing impact on gas mcf so'es.

increased solely as a resu!t of higher expenditu'es and estimated concel-Whde it is expected that a substantial costs from wholeso!e supphers due lotion costs of contracts are being number of residential customers will in large part to the deregulation of amorteed over o fiveveor period convert to gas heating, conservation natural gas The overage cost per beginning in March 1979. Total efforts are expected to offset these mcf of gas purchased from Northern amortection for Tyrone for 1980 and increased requirements resu' ting in Natural Gas Company was $2.09 1979 was $15 0 and S13 3 mil!cn, selo'ive!v f!at gas heating soies over during 1980, reflect ng on overage respectively. See Note 8 to the the next two years.

annualincrease of 21% per year financial statements for o further NSP did not have any major since 1978. The cost of gas purchased discussion of Tyrone.

rate cases in 1979 or 1978; however, from Midwestem Gas Transmission Another factor offecting income with the prospect of only modest Company was 54 52 per mcf durin9 was the reduction of the federal sales growth, coupled with inflo+onary 1980 which ref!ects on overage income tax rate from 48%, to 46% in expense pressures in 1980, NSP annuoiincrease of 37% since 1978 1979. This rate chance Wuced sought increased rates in Cl rate Continued increases are expected income taxes by $3 s anJ $3.9 mWon jurisdictions. NSP's 1980 rote increase because of deregulation of domestic in 1980 and 1979, respectively program ref!ected $125.1 million natural gas. Whi!e both electric It is expected that inflaton and in annual revenue increases. The producton and gas supply expense regulatory-prompted expenses wdl State of Minnesoto electric rote increases are recovered from continue to impact operating expense increase of $77.5 millon and the gas consumers through automatic fuel which will require continued rote rate increase of $11.0 mi!! ion have and gas purchased for resale relief effoits. See Note 13 to the been implemented, but remain odiustments, the customer is receiving financial statements for a further subject to refund pending opproval a price increase signol which discussion on the impact of inflaton of the Minnesota Public UtMties continues to prompt energy on the Company.

Commission. In addition, electric conservaton efforts.

retail and wholeso!e rate increases in Administrative and general, the Wisconsin Company await final other operation and me;ntenance expenses,in toto ( have increased by 21

Statem:nt of Income j

Nodhern States Power Company, Minnesofo and Subsidiaries Year Ended December 31 1980 1979 1978 (Thousands or dollars)

Electric..

$ 914 704 $ 832 663 $809 668 Gas...

233 807 205 623 160 481.

Telephone and heating.

10 539 9_890 _ _ 9 102 Total (Note 2)

I 159 052 1 048 17_6 979 251 Operating Expenses l

Fuel for electric generation.

203 924 178 972 168 663 Purchased and interchange power.

36 451 22 096 16 284 Gas purchased for resale...

172 893 142 606 109 021 Administrative and general..

72 716 59422 58 985 Other operation..

115 139 95 628 86 576 Maintenance....

88 838 73 842 64 965 Depreciation and amortization (Notes I and 8) 114 151 107161 89195 Property and general taxes..

92 535 87 497 84 722 Income taxes (Notes 1 and 5) 100_105 109 362 128 881 Total 996 752 87_6 586 807 292 Operating income.

162 300 171 590

_171 959 Other income Allowance for funds used during construction-equity (Note 1)..

9 950 9 944 7 237 Miscellaneous.

_4 192 3_270

. 7 179 Total 14 142

_ _13 214 14 416 Totalincome..

176 442 184 804 186 375 income Deductions and Non. Operating Toxes.

_ _ _ (690)

_ 1 527 6 572 Income before Interest Charges.

177 132 183 277 _179 803 Interest Chorges Interest on long-term debt.

61 352 61 726 62 274 Other interest and amortization.

7 209 3 704 4 369 Allowance for funds used during constcuction-debt (Note 1).

_ _(2 7_12) _

(2 83_1)

(2 060)

Total

_ 65 849 _ 62 599 _ 64 583 Net income (Note 2).

111 283 120 678 115 220 Preferred Stock Dividends 14 030 14 406 14 536 Earnings Avoilable for Common Stock (Note 2).

$. 97 253 $.106 272 $100 684

)

Average Shores of Common Stock Outstanding (000's).

30 087 30 270 29 712 Earnings per Shore on Average Shores (Note 2).

$3.23

$3.51

$3.39 Common Dividends Declared per Shore.

$2.385

$2.25

$2.135 See Notes to Financial Statements on pages 27 to 32.

22

Statement of Retained Earnings Northen States Power Company, Minnesota and Subsidiaries Yeci Ended December 31 1980 1979 1978 (Thousands of dollars)

Bolonce at Beginning of Year.

5342 479 5304 534

$267118 Net income.

111 283 120 678 115 220 Cepital stock expense.

(89)

(36)

(125)

Other..

4 427 Net additioris 111 198 120 642 115 522 Dividends declared Cumulative preferred stock at required annual rates.

14 030 14 406 14 536 Common stock-per share: 1980,52.385; 1979,52.25: 1978,52.135.

71 595 68 291 63 570 Total dividends declared.

85 625 82 697 78 106 Bolonce at End of Year (Note 3).

$368 052

$342 479 5304 534 Statement of Changes in Financial Position Source of Funds Funds from operations

,$111283 -

$120 678

$115 220 Net income Depreciation and other amortization.

E118 422.

111 941 96 270 Nuclear fuel amortization

~ 38 316 '

31 868 28 636 Deferred income taxes.

14 532 '

61 229 37 079 investment tax credit adjustments-net.

8 726' 18 615 9 220 Allowance for funds used during construction.

(12 662).

(12 775)

(9 297)

Total 278 617 331 556 277 128 Proceeds from sale of notes and securities Notes payable.

63 079 20 999 Long-term debt 509 157 6 587 Common stock.

3 920 15 365 10 846 Total 67 508 36 521 17 433 Total Source of Funds.

5346125 5368 077 5294 561 Application of Funds Construction expuditures.

$222 343 5231 336

$213 370 Transfer of Tyrone to abandoned projects.

(40 000)

Allowance for funds used during construction.

(12 662)

(12 775)

(9 297)

Tyrone abandonment.

(5 000) 80 000 Reductions cf long-term debt and redeemable preferred stock 1044 4 184 25 677 Acquisition of common stock......

36 774 Acquisition of redeemable preferred stock.

4 291,

Preferred and common dividends.

'85 625-82 697 78 106 Increase (decrease) in working capital (excluding notes payable).

10 230 22 773 (15 430)

Other-net.

3 480 (138) 2135 Total Application of Funds.

5346 125 5368 077 5294 561 Increase (Decrease) in Working Capitol (excluding notes pcyable)

Cash and temporary cash investments (498)

$ (37 291) 164 Accounts receivable-net.

23 035 42029 (34 592)

Materials and supplies.

23 068 35 884 (6 550) long-term debt and redeemable preferred stock due within one year.

2 527 21 979 (14 372)

Accounts payable,Tyrone charges accrued and salaries, wages, etc.

(3 669)

(56 234) 2 047 Rcvenue refunds due customers 3 151 (3 151) 34 976 income and other taxes accrued.

(40 478) 20 787 4 633 Other current assets and liabilities-net.

3 094 (1 230)

(1 736)

Total.

$ 10 230 5 22 773

$ (15 430)

See Notes to Financial Statements on pages 27 to 32.

22

Balanco Sheet Northern States Power Company, Minneso;a and Subsidiaries December 31_

1980 1979_

(Thousands of dollars)

ASSETS Utility Plant (Notes 1 and 6)

Electric-including construction work in progress: 1980, $217,673,000; 1979,5216,560,000.

$2 949850 52 802 123 Gos.

227 648 204 465

_ 86 817 73 303 Other..

3 264 315 3 079891 Toto!....

(871 877)

(786 504)

Accumutoted provision for depreciation.............

Nuclear Fuel-including in process: 1980,519,183,000; 1979,523,697,000.

163 611 142 283 (1_62_211) _.(123_895)

Accumulated provision for omortization.

2_3_93 838 2 311 77_5 Net utility plant.

l

.. __ 5961 591_6 l

Other Property and Investments.

l I

l Current Assets 5604 5 294 Cash (Note 7)..

Temporcry cash investments.

8 378 9 186 116 350 93 742 Accounts receivable.

Accumulated provision for uncollectible accounts.

(1 373)

(1 800)

Materials and supplies-of overage cost Fuel..

99 364 81 284 Other 30 458 25470

_14_445

_ 9 697 Prepayments and other.

Total current assets.

273 226 222 873 Deferred Debits j

Extraordinary property losses (Note 8).

47 601 68 527 l

Other.

_ 1_4_641

. _10 76_7 Total deferred debits.

_6_2 242 79 294 Toid..

$2 735 267 $2 619 858 See Notes to Financial Statements on pages 27 to 32.

24

l

)

)

December 31 1980 1979_. _

(Thousands of dollars)

LIABILITitS Capitalization (Page 26) (Note 3)

Common stock-outhorized 40,000,000 shores of $5 por value; issued shares: 1980,

$ 154170 $ 153 204 30,834,075; 1979,30,640,817 339 426 336 430 Premium on common stock...

42 Dividend reinvestment-installments.

368 052 342 m Retained earnings.

Treasury stock: 1,500,000 shores of cost.

_(36 774) 824 874 832 155 Total common stock equity.

Cumulative preferred stock--outhorized 3,500,000 shares of $100 por value; outstanding thores: 1980,2,207,304; 1979,2,275,000 (Note 4)

Non-redeemoble....

205 000 205 000 15 709 20 000 Redeemable (net of treasury shorcs at cost)..

Premium on preferred stock 729 729 890 900 891 505 Long-term debt (Note 6).

Total capitolization.

1 937 212 1 949 389 Current Liabilities Notes payable-commercial paper (Note 7) 84 078 20 999 Redeemable prefered stock due within one year.

2 527 75 597 65 248 Accounts poyoble...

Tyrone cancellation charges accrued (Note 8).

32 000 40 000 Solaries, wages, and vacation pay accrued.

14 583 13 263 Rceenue refunds due customers.

3 151 Federal income taxes accrued.

37 808 3 746 71 148 64 732 Other taxes accrued.

Interest accrued...

20 643 18 834 Dividends declared on preferred and common stocks.

21 152 21 034 Other.

282 555 Total current I; abilities.

357 291 254 089 Deferred Credits Accumulated deferred income taxes (Note 1) 330 311 315 779 Accumulated deferred investment tax credits (Note 1).

103 554 94 828 Other.

6 899 5 773 Total deferred credits.

440 764 416 380 Commitments and Contingent Liabilities (Notes 8 and 9)

Total.

$2 735 267 $2 619 858 25

Statcm:nt of Capitalization Northern States Power Company, Minnesota and Subsidiaries December 31,1980 December 31,1979 (Thousands (Thousands of dollars)

• b of dollars)

• i Common Stock Equity (Note 3)

S 824 874 43 % 5 832 155 43 %

Cumulative Preferred Stock Non-redeemoble (Note 4) 53.60 series,275 000 shores. 527 500 4.56 series,150 000 shores.

15 000 4.08 series,150 000 shores.

15 000 6.80 series,200 000 shores.

20 000 4.10 series,175 000 shores.

17 500 7.00 series,200 000 shores.

20 000 4? 1 series,200 000 shores.

20 000 8.80 series,250 000 shores.

25 000 4.16 series,100 000 shores.

10 000 7.84 series,350 000 shores..__35.000 Total.

.5205 000 205 3 10 205 000 10 1980 1979 Redeemoble (Note 4) 510 36 series 1930.200,000 shores; 1979,225,0d0 shores......

$20 000 522 500 Less treasury stock 2 500 fund.....

Less current sinking (42,696 shores).

_. 4 291

_ 15 709 1

_ _ 20 000 1

N et.

515 709 520 000 Premium on Preferred Stock.

._ _729

_ _ 729 Long Term Debt (Note 6)

First Mortgage Bonds Minnesota Company-Series due:

June 1,1982,3% a

.521 500 May 1,1998,6% o 45 000 Oct.1,1984,3'/s o.

20 000 Oct.1,ly99.8 o 45 000 Sep.1,1986,4 % io.

15 000 Mar.1,2001,8 o.

50 000 Jufy 1,1988,4 o.

30 000 June 1,2001,8% b 50 000 Dec.1.1990,5?6.

35 000 Mar.1,2002,7'e a 50 000 Aug.1,1991,4 7e ?b.

20 000 Feb.1,2003,7W 6.

50 000 June 1,1992,4%*o 15 000 Jan.1,2004,8% o.....

75 000 Sep.1,1993,4 s o.

15 000 Oct.1,1989-2004,7.97?a.

3: 000*

June 1,1995,6'/s?.

. 30 000 May 1,1996-2005,7%*o.

25 000*

Mar.1,1996,6 2 o.

8 800* May 1,2005,9W o.

80 000 1,1996,5%io 45 000 Aug 1,1997,6W*a.

Oct.

30 000 Total.

.5790 300 790 300 790 300 First Mortgage Bonds Wisconsin Company-Series due:

(less reacquired bonds of $924,000 and $1,0C 000 at December 31,1980 and 1979, respectively)

Annual Sinking Fund Requirement 1980 1979 June 1,1987,4 %?o.

.5100

.5 7660 5 7767 Aug.1,1994,4 W o.

150 12 562 12 708 Dec.1,1999,9 % ?o.

100 8 758 8 871 Oct.1,2003,7% a.

300 27 846 28 045 Total.

5650

.556 826 557 391 56 826 57 391 Guaranty Agreements Minnesota Company-Series due:*

Feb.1,1989-2003,5.39 o 57600 5 7600 May 1,1987-2003,5.66?.

28 750 28 750 Feb.1,2003,7.40 o.

3 500 3 500 Totol.

539 850 539 850 39 850 39 850 Miscellaneous Long-Term Debt.

3 114 3 084 Unamortized Premium and Discount on Long-Term Debt,

_810 880 Total long-term debt.

_ 890 900 46 891 505 46 Total Capitalization.

$1937212 100 % $1949389 100 %

• Pollution control hnancing at average interest rates.

See Notes to Funanaal Staternents ot. pages 27 to 32 26

Notcs to Financial Stat;m:nts Northern States Power Company, Minnesota and Subsidiaries

1. Summary of Accounting Policies System of Accounts-The accounting records of the Nuclear Fuel Amortization-Nuclear fuel amortization for Company and the Wisconsin Company are maintained in fuel loaded prior to December 1,1977, includes on accordance with either the uniform systems of accounts estimateo charge forcost of future reprocessing of spent prescribed by the Federal Energy Regulatory Commission fuel with a credit for value of residual uranium in the spent (FERC) er those prescribed by the state commissions, fuel.The estimated reprocessing costs are greater than the which systems are the same in all material respects.

estimated vclue of residual uranium. Commencing with Principles of Con olidation-All significant subsidiary fuel reloads offer December 1,1977, the amortization companies have been included in the financici statements.

includes only on estimated charge for future storage and Utility Plant and Retirements-Utility plant is stated at disposal of spent fuel. These estimated disposal costs are original cost.The cost of additions to utility plant includes subject to continumg review and, along with the onginal c st f the nuclearfuel,are amortized to fuel expense contracted work, direct labor and materials, allocable based on energy expended.

ove.-heads and allowance for funds used during construc.

tion.The cost (actual or estimated) of units of property Income Taxes-income toxes are now deferred for retired, sold, or otherwise disposed of, plus removal costs substantially all differences between book and tax basis.

less salvage,is charged to the accumulated provision However, income tax expense is still currently offected by for depreciation and amortization. Maintenance the reversal of amoun:s accounted for on the flow-through and repair costs and replacement and renewal of mathod in prior years.

items determined to be less than units of rroperty are Investment Tax Credits-Investment tax credits are deferred charged to operating expenses.

and amortized to income over the estimated lives of Allowance for Funds Used During Construction (AFC)-

the related property. Additional investment credits of 1 %%

AFC,a non-cash item,is included in construction work in related to the Employee Stock Ownership Plan do net progress and credited to income using composite rotes affect net income because the reduction in Federal income which assumes that funds used for construction were taxes charged to operations is offset by a charge to provided by debt and equity.The AFC so included in deferred investment tax credit adjustment. Such amounts construction work in progress will ul'.mately be induded are included in accounts payable until the common in the rate base in establishing rc:es for utility service.The stock is purchased.

composite AFC rate kr the Company was 7.75% in 1980, Revenues-Customers' meters are read and bills rendered 7.5% in 1979,and 7.2% in 1978.The AFC rate on a cycle basis. Revenues of the Company are recorded approximates a net of tax rate which because of rcN in the accounting period during which the meters are treatment in Minnesota yields the same result as would be read.The Wisconsin Company, pursuant to an order of obtained if a gross rate were used and the tax effect the Public Service Commission of Wisconsin, accrues recorded as a deferred item.The de'ermination of this rote estimated unbilled revenues for services provided from is pursuant to an order of the Minne oto Public Utilities the monthly meter reading date to month-end.

Commission in rate proceedings.The composite AFC rate for the Wisconsin Company was 7%.

2. Revenues Subject to Refund Depreciofion-For financial reporting purposes, Some of the rate increases which were placed in effect in depreciation is computed en the straight-line method 1980 are subject to refund. For 1980 electric and gas based on estimated useful hves of the various classes of revenuct W.lude $35,115,000 subject to refund which has property.Such provisions os a percentage of the overage increowd net income and earnings per share by balance of depreciable property in service were 3.46% >

$17,036,000 and 5.57 respectively.

1980,3.44% in 1979, and 3.41% in 1978. The depreciation expense for nuclear generating plants includes a provision for decommissionirg costs of 10% of installed cost of nuclear plant.

l 1

l

commedoch

. _ - Treasury stoch

3. Common Stock

.... Shores Por Value

._Prem um Shores

. Cost (Thousands of dollars)

Bolonce at January 1,1978..............

.29 532 773 5147 664 5315 691 Dividend Reinvestment and Stock Purchase Pion.

335 091 1 676 6 510 Employee Stock Ownership Plon.

102 244 511

_ 2 216 Bolonce at December 31,1978............

29 970 108 149 851 324 417 Dividend Reinvestment and Stock Purchase Plan.

564 169 2 821 9 891 Employee Stock Ownership Plan.

106 540 532 2 122 Bo once of December 31,1979........

30 640 817 153 204 336 430 l

- Dividend Reinvestment and Stock Purchos u.

190 093 950 2 948 Employee Stock Ownership Plan.

3 165 16

-48 Purchase of Treasury Stock.

1 500 000 5(36 774)

Bolonce at December 31,1980.

30 834 075 5154 170 S339 426

-1 500 000 5(36 774)

The Company's Articles of In, potion and Trust were not restricted as to payment of cash dividends Indenture provide for certain restrictions on the payment on common stock.

of cash dividends on common stock. Retained earnings

4. Cumulative Preferred Stock Allissues-The preferred stock may be colled at the option retirement of a minimum of 12,500 shores and a maximum of the Company at prices per shore at December 31,1980, of 25,000 shares at $101.10 per shore, the original ranging from $102.00 to $115.00 plus accrued dividends.

purchase price. In 1980 and 1979, the Company retired Redeemoble issue-The 510.36 series is subject to a 25,000 shares each year.

mandatory annual sinking fund requirement for the

5. Income Tax Expense

- The totalincome tax expense differs from the amount computed by applying the Federal income tax statutory rote (46% for 1980,1979 and 48% for 1978) to net income before income tax expense. The reasons for the difference are os follows:

1980 1979

,1978 (Thousands of dollars)

. Tor computed at statutory rate.

S 97 273 5106 637 5118 460 Increases (decreoses)in tax from:

State income taxes, net of Federal income tax benefit 9 472 12 823 14 161 Allowance for funds used during construction.

(14 987)

(5 877)

(5825 (4 463,

Investment tax credit or plant oddrions.

)

(25 725)

(13 426)t -

- Investment tax credit odsstments-net.

10 605-22 152 10 410 Reduced tax depreciation resulting from use of the flow-through method in prior years 6 535 6 070 7 750 Other-net.

_ 2 91_4), 4 938) J1321)'

(

(

Totalincome tax expense.

5100 179 5111 142 5131 571 Effective income tax rate.

47.4?&

_47.9 %

533%

Composite statutory tox rote.

, 51.7*6 51.7 %

53.4%.

Income tax expense is comprised of the following:

Induded in income taxes Current Federal tax expense.

5 60 918 5 13 4F1 5 61 886 Current state tax expense.

14 t,J3 12 480 18 755 Deferred Federal tax expense.

11 042 50 375

' 29 974-Deferred state tax expense.

3 487 10 884 7 856 Investment tax credit odiustments-net

_10 605 22 152 jy 110 -

Total.

100 105 109 362 128 881-included in depreciot:c, expense Deferred Federaltax expense.

2 659 2 174-1 825 R

Deferred stote tax expense.

353 373-330 Included in income deductions Current Federal tax expense..

(2 008)

(747)

-995 Current state tax expense.

(333) 10 291

- Deferred Federal tax expense 3

_, QO). _ f5_1)

Totalincome tox expense.

5100 179 5111 142 5131 571 Deferred income fox expense is comprised of the following:

Tyrone abandonment....

. 5 (9 523) S 31 250 Excess of tax over book depreciation-net.

18 665 23 296 5 25 058.

8 ADR repair allowance.

Overhead costs.

4 506 5 807 9 396 4 031.

4 611 4 471 Other.

__1 188) _L309

-1 (735)

(

Total.

. $ 16_944 5 63 776 5 39 234 28-

6. Long-Term Debt

9. Com:.ntments and Contingent Liabilities The anneol sinking fund requirements of the Company At December 31,1980 there were commitments (exclusive are the amounts necessory to redeem 1% of the highest of those related to theTyrone Energy Park,see Note 8)in principal amoet of each series of first mortgage connection with construction programs aggregating obout bonds (other th,n pollution control financing) et any time 5620 million including 5525 million relating to nuclear tuel outstonding. Prcperty additions have been applied in lieu purchases.

of cash as perm.tted by the Company's Trust Indenture.

There are also contracts for the purchase of cool, -

All uti!4 property, except for minor e xclusions,is natural gas,and oil, and a contract for delivery of BTUs of

. subject to Ibe lien of the indentures relating to the first energy for the operation of the Monticello nuoeor power mortgoge bonds.

plant. The nuclear fuel lease payments are cf orged to fuel for electric generation based on the BTUs c' energy

7. Short-lerm Borrowings and Compensating Bolonces expended.

At December 31,1980 there were bank lines of credit Rentals (including nuclear fuel of 510; 90,000, oggregating $110,400,000.There are compensating 11,856,000, and $10,078,000) were opproximately balance arrangements m support of such knes of credit s.9,200,000, $18,400,000 and $15,800,000 for 1980,1979 and substantioliy all cash is considered compensating and 1978, respectively.

balonces.These credit lines make short-term fmanong Minimum lease commitments os of December 31, available by providing bank loans and back-up for 1980, under all non-conceloble leases (principolly lease of commercol paper.

nuclear fuel) are about: 1981, $13,000,000; 1982, -

S15,100,000;3983,526,800,000;1984,5300,000;1985, 8.Tyrone Nuclear Plant Abandonment 5300,000; ond,1986-1990,5100,000.The minimum lease The Wisconsin Company was o participant in o jointly-commitments for nuclear fuel are based on the estimated owned project for the construct, ion of a 1,100 megawatt use through 1983, a finc.I payment of $22,000,000 in 1983, nuclear generating plant colled the Tyrone Energy and the escolation of the contract price using the la'est Park,in which it had a 67.6% undivided interest. Three wholesale commodities price index.

other entities had the remaining 32 4%. During 1979, The Price-Anderson liabil;ty provisions of the Atomic

. the Public Service Commission of Wisconsin issued on Energy Act of 1954 provides for a limit of 5560 million order denying the opplication for authority 1 on each nuclear generoting unit in the United States for construct the proposed plant and the co-owners oblic liubility claims that could arise from o nuclear subsequently _ reoched on ogreement to terminate incident. in the event of any such incident, oil owners of the proiect.

nuclear generating units licensed to operate would be At December 31,1980 the Wisconsin Compc.ay had required to contribute toward satisfaction of such claims.

spent opproximately $43 rnillion, net of solvage for The owners insure against this exposure by purchasing its 67.6% shore of the project and estimates it will incur the maximum ovoilable private insurance of $160 milhon,

$32 million for the remaining concellation costs net and the remainder is provided by indemnity agreements of recoverable costs,for o total of $75 million.The octual with the Nucleor Regulatory Commission. In the event amount of remaining concello. on costs ultimately to of such on incident,the Company,to the extent of be incurred will cepend upon tne result of negotiations its ownership participation, could be assessed up to with vendors and otners.The total cost has been S5 million for each licensed reactor owned, with recorded as a deferred extraordinary preserty loss a maximum ossessment of $10 million per reactor in and is being amortized over a sixty-month penod a year.The Company now owns three reactors.

which started in March 1979. Deferred taxes have been recorded to reflect the timing difference between

10. Pension Plans the tax write-off and the book amortization.The Company The noncontributory funded pension plans cover and the Wisconsin Company have filer. on application substantially all employees. Pension costs are determined with FERC to provide forthe show af the loss,

under the aggregate cost method using market value of between the two Componies over the sixty-montn penod assets of the trust fund. Contributions, equal to the pension underterms of an existing Coordinating Agreement.

costs occrued,made to the trust fund were $20,522,400 FERC hos allowed payments to be made by the for 1980, $18,070,500 for 1979 and $16,308,000 for 1978.

Company to the Wisconsin s.ompany in accordance w.th A comparison of accumulated plan benefits and plan net such application subject to refund.

ossets for the defined benefit plans is presented below:

The Company and the Wisconsin Company are December 31,1980 seeking to recover these costs through rate increases in Actuarial present value of (bousands of dvars) various jurisdictions.To the extent that amortization occurnuloted piar benefits; were to be denied in rate proceedings,the remaining -

vested....

5212 315 Nonvested 13_47_7 oppropriate unomortized costs would be written-off at the time o final determination is made.The unomortized Total 5225 792

costs, net of deferred income taxes, at December 31,1980 Net assets available for benefits.

5236 605 and 1979 were $24,937,000 and $35,417,000, respectively.

The net assets available for benefits exceed the octuarial Management hos ossessed the potential impact of the present value of vested benefits os of December 51,1980, termination of the Tyrone Energy Park proiect and has b S24,290,000.The weighted overage assumed rate

]

concluded that the effect of o wn,te-off,if any,wo? not of return used in determining the octuarial present value

_ be material to the financol pos, tion of the Compor of occumulated plan benefits was 7% for 1980.

i,

T 29

11. Segment Information

12. Summarized Quarterly Financial Data (Not Certified)

_ Year Ended December 31,1980

_. Electric Gas Other Total....

Quarter Ended March 31, June 30, September December (Thousonds of dolfors) 1980 1980 30,1980*

31,1980*

Operating phoosonds oidoisasi

~~~

~

revenues.

. $ 914 704 $233 809 $10539 $1159052 Operating Operatino eevenues

$322 288 $250 415 $279 389 $306 960 mcomelefore Operating incometaxes..

246 072 14 158 2 175 262 405 income.

40 562 30 404 46 438 44 897 Depreciation and Net income..

31 004 18 725 32127 29426 i

amortization.

104 659 7 760 1 732 114 151 Earnings Construction ovadable for enpend.fures.

190 656 28 412 3 275 222 343 common stock 27 435 15 165 28 632 26 021 Earnings per r

.. - -. -..... December 31,1980 _ _.

shore.

.89 49

.97

.89 Net utility plant.. $2 205 046 $165391 $23 401

$2 393 838 Other corporate

_..... _ June 30 september ___ December Quorier Ended _

ossets.

341 429 March 31, Total assets

$:I735267

" 79 J979 30 3

y79.

1,W7L (Thousands of dollars)

Year Ended December 31,1979 Operating I

" Electric ~

~ Gos '

Other

~ Toiot revenues

$297120 5239 635 5246 127 $265 293 Operating (Thousands of dolfors) income.

55 323 37 214 42869 36 183 Operating Net income.

43 448 25 018 30 692 21 519 revenues.

.S 832 663 5205 623 5 9890 $1048176 Earnings Operating ovoilable for income before cnmmon stock 39814 21 384 27 123 17 950 incometaxes.. 257 897 20 640 2 415 280 952 Earnings per Depreciation and shore.

1.33

.71

.89

.59

'omortization.

98 281 7 233 1 647 107161

,For the three months ended S tember 30 1 yggo,,,,,nu,, ;,erug, s;2,55fooo ong sy, g,980 and Decemb,,er 31, Construction 558,ooo,,,,p,c,,9,

expenditures.

213 577 16 202 1 557 231 336 7

subject to refund which has,ncreased net income and comings per shore by $6,097,000 und $Q 939,000 and $.20 and $.37, respectively.

, _ _ _ _ _ _ D_ecemb_er 31,1979 Net utility plcnt. 52144 739 $145101 521 935.. _ __

$2311775 Other corporate assets.

_ _308 083

13. Financial Reporting of Changing Prices (Not Cerhfied)

Totol ossets

$2 619 858 The following information is supplied in accordance with the requirements of the Financial Accounting Standards Year Ended December 31,19_78 Bocrd (FASB) Statement No.33, Financial Reporting and Electnc Gas O her

-Total (Thovsonds of doflors)

Changing Prices, for the purpose of providing certain information about the effects of changing prices.This e uls.

.5 809 668 $160481 5 9102 5 979 251 information is not intended as a substitute for earnings Operating reported on a historical cost basis. It offers some income before perspective of the approximate effects of inflation rather incometaxes.. 285 258 13 287 2 295 300 840 than a precise measurement of these effects.

Depreaction and omortization.

80 913 6 864 141R 89 195 Constant dollar amounts represent histoncol cost Construction stated in terms of dollars of equal purchasin power, as expenditures.

200 467 10453 2450 213 370 measured by the Consumer Price Index for A I Urban

~

December 31,1978 "SU**rs @g. @ent cost amounts reHect Se nges m specific pnces of plant from the date the plant Neiu5ty plant. 752'091794 5136'315 52205 $2550173 c

cquired tci the present, and differ from constant O her corporate ws assets.

201 359 dollar amour,ts to the extent that specific prices have Total ossets

$2451W incre sed more or less rapidly than prices in generol.

~

Property, Plant, and Equipment-The current cost of all 1

depreciable property is the estimated cost of replacing l

existing depreciable property and was determined by indexing the original cost of the property by the Handy-Whitman Index of Public Utility Construction Costs.The unrecovered portion of the original cost of the capitalize 6 nuclear fuel is restated in terms of constant dollar and current cost by applying the CPI-U. Spent nuclear fuel 30

___m__

13. Financial Reporting of Changing Prices (Not Certified) less purchasing power.Significant ornounts of long term (Continued) debt outstanding which will be paid boch in dollars having less purchasing power ond,therefore, for purposes is not reflected in either of the supplementary calculations.

of these calculations, shows a net gain from holding Accumulated Depreciation-The net assets at year-eno monetary liabilities in excess of monetary assets. However, were determined by reducing the respective constant the Company and Wisconsin Company do not have the dollar and current costs by the corresponding theoretical opportunity to realize a holding gain on debt and occumulated provision for depreciati >n.This provision for preferred stock because they are limited to the recovery of occumulated depreciation was calculated by the only the historical embedded cost.

oppropriate survivor curve reserve ratios, by FERC Other items-Fuel inventories, the cost of fuel used in account, to the respective vintaged indexed amounts.

generation, and gas purchased for resale have not been Depreciation Expense-The current year's provision for restated. Regulation permits the recovery of actual fuel depteciation for each method was determined by and pu chosed gas costs through the operation of applying depreciation rates, by FERC occount, to the adjustment clauses in basic rate schedules. For this reason, year's overage indexed plant amounts, fuel inventories are effectively monetary assets.

Reduction to Net Recoverable Cost-Under the rote-Since present tax laws do not allow deductions for making prescribed by the regulatory commissions, only higher depreciation rates to reflect the ef' - of inilotion, the historical cost of plant is recoverable in revenues os ncome tc as included in the dato adjusd for general depreciation.Therefore,the excess of the cost of plant inflation were not adjusted from those amounts presented stated in terms of constoni dollars or current cost over the in the primary financial statements.Therefore, the effective historical cost of plant is not presently recoverable in rates Federal income tax rate, when odiusted for inflation,is as depreciation, and is reflected as o reduction to net 83.5 percent under constant dollar and 105.0 percent recoverable cost.While the rote-making process gives no under current cost for 1980,each of which exceeds its recognition to the current cost of property, management reported effective tax rate of 47.4 percent.

balieves, based on post practices,it will be allowed to As con be seen from the accompanying information earn on the increased cost of its net investment when in the five-year comparison of supplementary financial replacement of facilities actually occurs.

dato, inflation has had a significant impact. Although Goin from Decline in Purchasing Powerof Net Amounts operating revenues over the lost five years has increased Owed-By holding monetary assets, a loss of purchasing significantly as reported, they have remained relatively power is suffered during periods of inflation because the constant in real terms. Also, even though cash dividends amount of cash received in the future for these items will have increased every year, they have decreased every purchase less. Conversely, by holding monetary liabilities, year in price level adjusted dollars. Market price per primarily long-term debt, there is a benefit because the share in adjusted dollars has also had a significant decline.

povment in the future will be mode with dollars having Statement of income from Continuing Operations Adjusted for Changing Prices for the Year Ended December 31,1980 (rhovsonas of dolio,,)

Constant Doltor Current Cost Historical Avero e Aver e

._C_osL M Dg lors _

l_98Qpo ps Operating revenues

$1159052

$1_159_052

$1_159_0 _2_

5 Electric fuel andpurchased 240 375 240 375 240 375 Gas purchased for resole. power 172 893 172 893 172 893 Depreciation.

99 149 190 672 215 215 Amortization.

15 002 15 002 15 002

. Other operating and maintenance expense.

369 228 369 228 369 228 income tax expense.

100 105 100 105 100 105 65 849 65 849 65 849 Interest expense........

(14,832)

_ 1_4_832)

_ (1_4 832)

(

Otherincome and deductions-net.

l Total.

1 047_7_69 1_139 292

_1_163 S_35 Income (Loss) from continuing operations (exduding reduction to net recoverable cost),

$ 111283

$ _ 19 760*

$_ (4 783)

Reduction to net recoverable cost.

5 (186 513)

$_ (81554)

Goin from decline in purchasing power of net amount: owed

$ _ _179_43 5 179 492 Effect of increase in general price level.

$ 498 459 418 43 0

Increase in specific prices (current cost) of property held during the year"

_ 80 416 Excess of increase in general price level over increase in specific prices 5

• tnclu ng the reductron to net recoverable cost. the income (fo~ss) frc.m continuing operations on a constant dollar basis would have been $(166 753) for 1980.

31 1980, current cost of property. net of occumulated depreciotson was $4.445.208. whole historical cost or net cost recoverable through deprecnotoon "A

m i

31

f

.13. F:noncial Date of Changing Prices (Not Certified) (Continued)

Five-Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices ti, niavsa,ss er wdwar r9so ootiors;

.._.... _ _ _. - _._ Y'O'

'd k'C&

.-1980 -

1979

-.8 197 977-1 197

-.6. -

As reported.

$1159 052

$1048176 S 979 251 5 881 510

$ 769 604 Adjusted.

1 159 052 1 198 065 1 241 690 1 200 617 1 120 543 Income (Loss) from continuing operations (exduding reduction to net recc.erable cost)

As reported..........

l Constont dollar ediusted.

5 111 283

$ 120 678 19 760 58 356 l

Current cost adjusted.

(4 783) 27 162 Income (Loss)d stock)per common shore (ofter dividend requirements on preferre As reported............

$3.23 53.51 Constant doHor odiusted.

.19 138 Current cost odiusted.

(.63) 35 Net assets at year end at net recoverable cost As reported..........

$1046312 51 057 084 Constant dollor odiusted.

1 002 581 1 139 210 l

Current cost odiusted.

1 002 581 1 139 210 Excess of increase in general price level over increase in specific prices.

S 80 416 5 95 014 Goin from dedine in purchasing power of net amounts owed., 5 179 492 5 211 390 Cash dividends dedored per common shore As reported.

$2.385

$2.25 52.135 52.03

$1.94 Adjusted..

2385 2.57 2.71 2.76 2.82 Market price per common shore at year-end As reported.

l Adjusted.

$21.50

$22.375 523.50

. $28.25

$29.50 21.50 25.57 29.80.

38.48 42.95 Mid-War consumer price index.

247.6 216.6 1953 181.8 170.1 Report of Management to Shoreholders Accountants' Opinion Management is responsible for the financial statements and To the Shorehdders of Northern States Power Company:

representations in the annual report. Management believes We have examined the balonce sheets and statements of the finonod statements have been prepared in confcymonce with generdly accepted accounting princip es. In preparing capitdization of Northem States Power Company t

(Min.iesota) and its subsidiaries os of December 31,1980 such stateinents.monagement makes informed judgements and 1979 and the related statements of income, retained and estimates of the expected effects of events and transactions that are currently being reported.

eomings and changes in financial position for each of the three years in the period ended December 31,1980. Our Monogement depands on the Company's internal examinations were made in accordance with generally accounhng contrd system to assure reliability in financial accepted auditing standards and, accordingly, included reporting. This system is designed to reasonably assure such tests of the occounting records and such other the ossets are sofeguarded and transactions are executed auditing procedures os we considered necessary in the in accordance with monogement's authorization and

-ircumstances.

recorded properly for the preparation of financial state.

An discussed in Note 2 to the financial statements, ments in accordance with generally accepted accountin9 1980 revenues indude amounts which are subject to refund principles. Management believes the Company's pending the ou come of various rate proceedings. The accounhng contrds provide reasonable assurance that ultimate outcor le of these proceedings connot presently potenhally n aterial errors or irregularities would be be determinec.

prevented

>vould be detected within a timely period by employees in the normal course of their duties. The Audit in our opinion, subject to the effects on the 1980 Committee of the Board of Directors, composed sdely of financial statements of such adjustments,if any, os might directors who are not olhcers or employees, meets regulcrly have been required had the outcome of the uncertainty referred to in the preceding parograph been known, such with management,intemol auditors and the Company's financial statements present fairly the financial position of independent certif*ed public accoun'onts to discuss their the Componias at December 31,1980 and 1979,and the evoluotion of intemal accounting contrds and financial resu ts of their operations and the changes in their financio!

reporting. Internal and independent auditors have free positici for each of the three years in the period ended access to the Audit Committee,witnout management's December 31,1980,in conformity with generally accepted

. presence, to discuss the results of their audits. The Audit Committee recommends for sacrehdder rohfication the accounting principles applied on a consistent basis.

= se!ection of the ir'deoendent ouditors to perform on audit in DELOITTE HASKINS AND SELLS occordance with genc:olly occepted aud. ting standards Minneopdrs, Minnesoto J

ond express on opinion on NSP's financial statements.

February 17,1981 32

S:lected Fin ~nci:::l Dzta r

l 1980 1979 1978 1977 1976 l Dollars in m llions except per share amounts)

Operating revenues.

51 159.1 51 048.2 S 979.3 5 881.5 S 769.6 Operating expenses.

996.8 876.6 807.3 725.9 624.0 N : t income.

111.3 120.7 115.2 98.6 97.6 Earnings available for common sto_k 97.3 106.3 100.7 84.1 83.1 Average shores of common stock outstanding (000's).

30 087 30 270 29 712 29 389 28 319 Earnings per share on overage shares 3.23 3.51 3.39 2.86 2.93 Dividends declared per share.

2.385 2.25 2.135 2.03 1.94 Total assets.

2 735.3 2 619.9 2 451.5 2 407.4 2 306.4 Long-t:rm debt 890.9 891.5 893.1 916.0 026.6 Red cmable preferred stock (net of treasury sic es) 15.7 20.0 22.5 25.0 25.0 Ratio of tornings to fixed charges.

4.0 4.4 4.6 4.0 3.7 Financial Statistics 1980 1979 1978 1977 1976 Earnings per shore on average shares.

S 3.23 5

3.51 5

3.39 5

2.86 S

2.93 Return on overage common equity 11.7?6 13.2 %

13.3 %

11.8 %

12.6 %

Divider.as in percent of earnings.

73.6?6 64.3 %

63.1 %

71.0 %

67.1 %

Divident.s in percent of book value....

8.9%

8.8%

8.7%

8.6%

8.5%

Five year growth rates in earnings per share (1) 3.4%

6.8%

5.4%

2.2 %

2.4%

Construction expenditures (Millions)..

5 222.3 5 231.3 5 21? 4 5 159.3 5 178.0 Percent of construction expenditures financed by internally generated funds (excluding AFC).

88.7 %

76.8 %

98.0 %

100.0 %

75.7 %

Cash dividend coverage 3.7 4.6 4.1 4.1 4.2 AFC as a percent of earnings per share 13.0 %

12.0 %

9.2%

8.4%

22.2 %

Effective tax rate.

47.4 %

47.9 %

53.3%

51.5 %

47.6 %

Capitalization (2)

Common.

40.8 %

42.2 %

40.5 %

38.7 %

36.7 %

Preferred 11.0 %

11.6 %

12.0 %

12.2 %

12.1 %

Debt.

48.2 %

46.2 %

47.5 %

49.1 %

51.2 %

Total.

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

Embedded cost of long-term debt...

7.00 %

7.00 %

6.90 %

6.85 %

6.79 %

Average plant investment per dollar of revenue...

5 2.87 5

2.99 5

3.02 S

3.16 S

3.42 Depreciation reserve in percent of deprecioble plant.

29.1 %

27.9 %

26.4 %

24.3 %

23.7 %

Depreciation provision in percent of average depreciable plant.

3.46%

3.44 %

3.41 %

3.43 %

3.45 %

Benefit employees (at December 31) 6 965 6 700 6 580 6 694 6 511 l

AFC-Allowance for Funds Used Durung Constructuon (1) Least squares method.

(2) Includes notes payable and long. term debt and redeemable preferred stocks due within one year 33

Operating Statistics Northern States Power Company, Minnesota and Subsidiaries ELECTRIC Revenues (thousands) 1980 1979 1978 1777 1976 Residential With space heating

$ 28 017 5 23 607 5 17 921 S 12 739

$ 9 711 Without space heating..

290 223 260 567 252 914 233 942 223 339 Small commercial and industrial.

149 878 131 872 122 992 112 435 109 110 Large commerc ol and industrial.

330 276 289 202 266 804 234 480 214 121 Street lighting and other 22 216 20 061 19 193 18 944 19165 Total retail.

820 612 725 309 679 824 612 540 575 446 Sales for resale.

87 220 102 378 125 592 118 018 61 444 Miscellaneous.

6 872 4 976 4 252 1 702 6 894 Total

$ 914 704 5 832 663 5 809 668 S 732 260 5643 784 Sales (millions of Kwh)

Residential With space heating 763 721 575 445 369 Without space heating..

6 283 6 177 6 118 5 976 6 048 Small commercial and industrict.

3 380 3 284 3 172 3 027 2 964 Large commercial and industrial.

10 033 9 854 9 374 8 875 8 541 Street lighting and other.

_ 549

_ 539

_ _5_26

_ _543_

_ 574 Total retail.

21 008 20 575 19 765 18 866 18 496 Sales for resole.

4 34_6 5 041

_ _ 6 795

_ _7_500 3 7_30 Total 25 354 25 616 26 560 26 366 22 226 Customer Accounts (at December 31)

Residential With space heating 44 711 39 393 32 846 25 878 19737 Without space heating..

921 545 910 106 892 127 875 892 870 157 l

Small commercial and industrial.

105 888 103 831 102 049 99 556 89 157 Large commercial and industrial.

5 335 5 107 4 861 4 634 4 346 S+reet lighting and other

_ 6 792 6 641 6 504 6 262

_ 6 870 Total retail.

1 084 271 1 065 078 1 038 387 1 012 222 990 267 Sales for resole.

77 76 84 83

_ 7'3 Total 1 084 348 1 065154 038 471 1 012 305 990 340 Residential With Space Heating Annual Kwh per customer.

18 016 19 986 19 637 19 654 21 064 Anmol revenue per customer.

$ 661.77 5 654.90

$ 612.20 5 561.83 S 554.47 Aver ige revenue per Kwh.

3.67c 3.28c 3.12c 2.86c 2.63c Residential Without Space Heating Annual Kwh per customer.

6 862 6 858 6 923 6 858 7 009 Aanual r evenue per customer.

$ 316.94 5 289.27 5 286.19

$ 268.48 5 258.82 Average revenue per Kwh.

4.62c 4.22c 4.13e 3.91 c 3.69c Kilowatt. hour Output (millions)

Thermal.

23 706 24 381 25 866 26 428 21 598 Hydro...

827 924 945 771 569 Purchased and interchange.

2 561 1 856 1 499 828 1 723 Total.

27 094 27161 28 310 28 027 23 890 Capability at Time of Maximum Demand (megawatts)

Company owned..

6 110 6 108 6 257 6 209 5 657 Purchases and sales-net.

504 (264)

(306)

(644)

(241)

Total.

6 614 5 844 5 951 5 565 5 416 Maximum Demand (megawatts).

4 873 4 247 4 625 4 503 4 317 Date of Maximum Demand.

July 14 Aug 7 Sept 7 July 19 Aug 19 34

b GAS Revenues (thousands)

_ 1980 1979__

1978 1977 1976 Residential With space heating

$ 108 939 S 100 810

$ 80 394 5 68 756 5 58 654 Without space heating..

2 921 3 434 2 993 2 890 2 565 Commercial and industrial.

119 157 98 224 74 437 67 654 56 127 Miscellaneous.

. _.2 792

_ 3 155 2 6_57

_ _ 2 566

_ 1518 Total.

$ 233 809 5 205 623

$ 160 481 5 141 866

$118 864 Sales (thousands of mcf) f Residential With space heating 30 558 33 616 31 533 30 044 31 795 Without space heating..

716 807 801 856 909 Commercial and industrial 39 798 38 737 36 108 37 112 39 373 Miscellaneous.

51 54 40 85 80 Total.

71_123 73 214 68 482 68 097 72 157 Customer Accounts (at December 31)

Residential With space heating 216 602 206 195 198 977 193 581 188 631 Without space heating..

30 246 33 488 35 124 36 356 37 712 Commerciol and industrial

_ 2_3_381_

22_762

_ 22_222

_ 21 848

_ 2_1 460 Total.

270 229 262 445 256 323 251_785 247 803 Residential With Space Heating Arnual Mcf per customer 145 167 161 157 171 Annual revenue per customer.

S 515.40

$ 499.53 5 409.87 5 360.22 5 316.07 A*seroge revenue per Mcf.

S 3.57 5

3.00 5

2.55 5

2.29 5

1.84 35

)

Ccmm n Stock Data 1980 1979 1978 1977 1976 98 821 100 857 101 389 100 253 102 333 Shoreholders at year-end..

Book value at year end.

$ 28.12 5 27.16

$ 25.99 5 24.74

$23.87 Market prices 25 %

25 %

28 %

30W 30 %

High......

18 21 %

23 %

26W 23W Low.

Year-end.

21 %

22 %

23W 28 %

29W Quartedy Stock Data Shareholders' Calendar Following are the reported high and low sales prices Schedule of Dividend Payment Dates based on the NYSE Composite Transactions for the rnm n f ck Preferred Stock quarters of 1980 and 1979 and the dividends declared per 3 j$ober20,1981

{prilg1 A riiQ81 shore during those quarters:

p 1980 oc October 15,1981 High low Dividends January 20,1982 January 15,1982 First Quarter 23 %

18

.57 Second Quarter 25 %

19 %

.605 NSP's Dividend Reinvestment and Stock Purchase Plan

]

h O o er 2$

5 1979 Northern States Power Company's Dividend Reinvestment High low Dividends and Stock Purchase Plcn is provided for shareholders to First Quarter 25 %

23 %

.54 increase their holdings of N3P common stock. Dividends Second Quarter 24 %

21 %

.57 and optional cash payments are used to purchase NSP f,iu h Q$a er 7

c mm n stock shores on the open market at a weighted s

overage pnce.

Common and preferred stock dividends are reinvested automatically. Dividends are reinvested Distribution of Common Stock-December 31,1980 qu rter y, while optional cash payments are, invested l

By Size of Holdings monthly. NSP sends a statement offer each purchase,

_ Shoreholders_

Shores outstondins _

detailing the purchase and the shares held for the of S Held Number f$ofo Number

["

Participant. Any costs, commissions orfees for reinvesting dividends nd m king optional cash payments are 1 to 25 20 151 20.4 %

244 711

.8 %

26 to 50 12 655 12.8 494 366 1.7 p id by NSP. Forincome tax purposes, brokerage 51 to 100 21 679 21.9 1 813 847 6.2 commissions paid by NSP for portioponts are treated as 101 to 200 21 950 22.2 3 317 756 11.3 taxob:e dividend income and are reported occordingly.

201 to 500 16 297 16.5 5 238 656 17.9 Shoreholders may join of any time by completing ca i$N ij j

outhorization form and returning it to NSP. Authorization 1

2 001 and over 567

.6 13 502 271 46.0 forms may be obtained by writing Shoreholder Relations, Total 98 821 100.0 %

29 334 075 100.0 %

NSP,414 Nicollet Mall, Minneapolis, Minnesoto 55401, or colling toll-free at (800) 328-8226. (From within the

=

=

=

==

Minneapolis-St. Paul creo, call 330-5560. Other Geographical Minnesoto residents call toll-free at (800) 292-4149.) You Shoreholders Shores Outstonding_

may terminate your participation in the plan of any time States Number Percent Number Percent by written notice to NSP Shoreholder Relations.

Minnesoto 39165 39.6 %

8 862 972 30.2 %

Wisconsin 10 764 10.9 1 795 113 6.1 North Dokoto 2 141 2.2 393 347 1.3 South Dokota 1 537 s.5 314 075 1.1 Total 53 607

.2 11 365 507 38.7 California 6 343 6.4

? 373 421 4.7 lilinois 4 838 4.9 2 306 541 7.9 Florido 4 134 4.2 957 165 3.3 New York 3 536 3.6 6 283 833 21.4 Michigan 2 752 2.8 560 058 1.9 8olonce of United States 23 392 23.7 6 431 184 21.9 Foreign 219

.2 56 3/'

.2 Total 98 821 100.0 %

29 334 075 100.0 %

36

f Stock Information is Available Informorion about your stock is meilable from Sue Blomquist, Administrator, Shareholder Relations, Northern States Power Company,414 Nicollet Mall, Minneapolis, Minnesota 55401, or by calling toll-free at (800) 328-8226. (From within the Minneopolis-St. Paul area, call 330-5560. Other Minnesoto residents may call toll-free at (800) 292-4149.)

A statistical supplement to this repon is available from the Securities issuance and Financial Reports Section, Northern States Power Company, 414 NicoCet Mall, Minneapolis, Minnesota 55401, as is a copy of NSP's Form 10-K annual repod to the Securities and Exchange Commission.

Information on NSP More information on NSP's operations and special publications issued by the company are available by writing to: Communications Department, Northern States Power Company,414 Nicollet Mall, Minneapolis, Minnesoto 55401.

Company publications cover energy conservation, o!!ernative energy sources, cool and nuclear generation, natural gas and NSP's research efforts.

Stock Exchange Listings Common stock is listed for trading on the New York Stock Exchange and the Midwest Stock Exchange.The ticker symbol is NSP. Preferred stock is listed for trading on the New York Stock Exchange.

Fiscal Agents Northern States Power Company, Northern States Power Company, l

1 Minnecoto Wisconsin Registrar Trustee-Bonds Common and Preferred Stocks first Wisconsin Trust Company 777 EastWisconsin Avenue Northwestern National Bank Milwaukee,Wsconsin 53202 Minneapolis, Minnesoto 55479 Transfer Agent Coupon Ibying Agents-Bonds First Wisconsin Trust Company Common and Preferred Stocks C "5 "

Northern States Power Company Milwaukee, Wisconsin 53202 414 Nicol!et Mall Minneapolis, Minnesoto 55401 Harris Trust and Savings Bank 111 West Monroe forwarding Agent Chicago,Ilknois 60690 No hwestern Trust Company Irving Trust Company o(k%ew York 10015 New York, New York 10005 Trustee-Bonds Harris Trust and Savings Bank 111 West Monroe Chicago,lilinois 60690 Annual Meeting of Shoreholders Coupon Ibying Agents-Bonds Harris Trust and Savings Bank The annual meeting of shareholders ill West Monroe will be held at 10 a.m. Wednesday, Chicago, I!linois 60690 May 27,1981, of the Minneapolis Irving Trust Company Auditorium and Convention Hall, I Wall Street lobby C, Third Avenue South and Northern New York, New York 10015 14th $treet, Minneapolis, MN.

States Power Company 414 Nicollet Mall Minneapolis, Minnesoto 55401 TNs Hforenchon is not on offer to se4. nor the scho'a$on of on offer to buyTNs oHer is made on!y by pro 3 pectus, which is avadaHe from NSP

Northem States Power Company we cc,. ve, V..maecpO' 5. ' Ave!O'S 592 I

_ #bh 3

i w

-_m___,,_

P-evt c U i A